Kentucky Motor Vehicle Dealer Surety Bond
A Kentucky motor vehicle dealer surety bond is a license bond that may be required for any person or business engaged in the sale of new or used motor vehicles within the Commonwealth of Kentucky. The Kentucky Motor Vehicle Commission (MVC), a division of the Kentucky Transportation Cabinet, determines whether a surety bond is required and sets the specific bond amount for each applicant. Bond amounts range from $15,000 to $100,000 based on the dealer’s prior sales history and financial position. Surety One, Inc. offers quick, no-hassle underwriting for Kentucky motor vehicle dealer bonds, including options for new applicants and those with challenged credit.
Bond Amount & Requirements
Kentucky Revised Statutes KRS 190.030 requires individuals licensed as motor vehicle dealers to file and maintain a surety bond if the MVC determines they do not meet certain financial qualifications. This is unique — unlike most states where the bond is mandatory for all dealers, Kentucky’s bond requirement is triggered at the discretion of the Motor Vehicle Commission based on the applicant’s financial standing.
When required, the bond amount may be calculated as the difference between the applicant’s unencumbered cash and unencumbered motor vehicle inventory. The MVC will determine the exact amount after reviewing the dealer’s application and financial position.
| Bond Range | License Type | Description |
|---|---|---|
| $15,000–$100,000 | New Motor Vehicle Dealer | Holds franchise/contract with manufacturer to sell new vehicles |
| $15,000–$100,000 | Used Motor Vehicle Dealer | Sells used motor vehicles to the public |
| $15,000–$100,000 | Motorcycle Dealer | Sells motorcycles (new and/or used) |
| $15,000–$100,000 | Automotive Mobility Dealer | Sells specialized mobility/accessible vehicles |
| $15,000–$100,000 | Motor Vehicle Leasing Dealer | Leases motor vehicles to the public |
| $100,000+ | Auction Dealer | Conducts motor vehicle auctions (amount may exceed $100,000 per MVC) |
| $100,000 | Restricted / Mobility Dealer | Must also demonstrate minimum $100,000 in business assets |
Important — Bond Not Always Required: Kentucky is one of the few states where the surety bond is not automatically mandatory for every dealer. The Motor Vehicle Commission determines on a case-by-case basis whether a bond is required and at what amount, based on the applicant’s financial qualifications. The bond may be waived entirely if the dealer demonstrates sufficient financial standing. Contact the MVC at (502) 573-1000 to determine your specific bond requirement before purchasing.
Who Needs This Bond?
KRS 190.010 defines a motor vehicle dealer as anyone who sells, offers to sell, solicits, or advertises the sale of new or used motor vehicles for commercial or retail purposes. The following dealer types may be required to post a bond at the MVC’s discretion:
- New (franchise) motor vehicle dealers
- Used motor vehicle dealers
- Motorcycle dealers
- Automotive mobility dealers
- Motor vehicle leasing dealers
- Auction dealers
- Restricted motor vehicle dealers (funeral coaches, emergency vehicles, etc.)
How Much Does the Bond Cost?
The cost of a Kentucky motor vehicle dealer surety bond (the “premium”) is a small percentage of the required bond amount set by the MVC. Your exact premium is determined by underwriting factors including your personal credit score, business financial strength, industry experience, and claims history. Because each applicant’s profile is unique, premiums vary and are quoted on an individual basis.
Surety One, Inc. offers competitive rates for all credit profiles, including programs for applicants with challenged credit. Surety bond application review and quoting are free of charge. There is no obligation to purchase. Contact us for your personalized quote.
Kentucky Dealer License Requirements
In addition to the surety bond (when required), the Kentucky Motor Vehicle Commission requires the following for a dealer license:
- Completed dealer license application
- An established place of business: a permanent, enclosed commercial building of at least 100 square feet with desk, chair, file cabinet, telephone, and electricity
- Display lot and customer parking on a hard surface (asphalt, concrete, or gravel) — no drive-through traffic allowed
- Business office cannot be a residence
- Permanent signage visible from the roadway with business name in letters at least 9 inches in height (wholesale dealers exempt from signage requirement)
- Local zoning compliance
- Certificate of liability insurance: $250,000 per person / $500,000 per occurrence / $250,000 property damage
- All vehicle salespersons must be individually licensed
- Copy of franchise agreement (new vehicle dealers only)
- Proof of meeting all location requirements (photos, drawings)
- Zoning certification (restricted/automotive recycling dealers)
- License fee of $100, application fee of $40, salesperson license fee of $20 per person, plus $20 criminal background check per salesperson
Filing, Renewal & Cancellation
When required, the surety bond must be filed with the Kentucky Motor Vehicle Commission. Kentucky dealer licenses expire on December 31st of each year and must be renewed before expiration. The bond must be renewed concurrently with the license. There is no set bond expiration date independent of the license — auto dealers renew their bond at the same time as their license renewal.
Bond Claims
A claim against the Kentucky motor vehicle dealer surety bond specifically protects the state and any parties who suffer financial damage from the dealer’s wrongdoing. Claimants must prove in a court of law that the dealer violated the licensing terms before damages can be paid from the bond — the surety is not required to pay until a claim is adjudicated by a court. This judicial determination requirement provides an additional layer of due process that is not present in most states.
Kentucky Motor Vehicle Commission
Kentucky Transportation Cabinet
105 Sea Hero Road, Suite 1
Frankfort, KY 40601
Phone: (502) 573-1000
Web: transportation.ky.gov
Surety One, Inc. is the Kentucky surety bond expert provider, licensed in all fifty states, U.S. territories, and Canada. We offer competitive rates and excellent customer service for Kentucky motor vehicle dealer bonds at every amount level and all other license bond classes. Need help meeting your MVC licensing requirements? Call us at (800) 373-2804, email us at Underwriting@SuretyOne.com, or click here to chat with a live underwriter (no bots!) for immediate assistance. We’re here to support your business success.
Surety bond application review and quoting are free of charge. There is no obligation to purchase.
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