Monthly Archives: November 2015

Auto Dealer Surety Bonds in Claim Process

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In this installment of surety bonds we will continue to look at major points of the claim process in auto dealer surety bonds.

Eligibility

Only certain consumers are eligible to process a claim against the auto dealerships surety bond.

–          Consumer Purchaser:  Most of the claims that a consumer will make are related to the auto dealer’s failure to report the sale and not producing a title for the vehicle.  This creates a multitude of issues for the buyer.  Other claims involve the dealership not paying off the vehicle that was traded in, when the mileage on the odometer has been changed or the condition of the car was not reported and clearly becomes evident after the purchase.

–          The Seller of a Motor Vehicle:  A seller may file a claim if an auto dealership fails to pay for cars sold to the dealership or through the dealership.  This seller may be another car dealer, an individual, a consignor, a regional or national auto auction.

Be Prepared

Auto dealers should follow these basic steps when a claim is presented against them.
–          Auto dealers need to understand and follow the rules that are set by your state’s department of motor vehicles.  It is important to meet all of the terms within the contracts to avoid complications later on.

–          Auto dealers should always be honest.  They should ask the claimant for proof of their loss.

–          All communication should be documented.  All correspondence, statements and agreements should have proper documentation.

–          Auto dealerships should always be proactive in finding a solution to problems that have arisen before an official surety bond claim.

Look for assistance from the surety bond agency

When a claim is brought to the attention of the surety bond company all of the parties involved in the argument to explain their side of the story.  The guarantee that is offered by the surety bond company is that if they don’t find the claim to be legitimate they will not pay.  The opposite is true as well, if the evidence is found to be against the dealership the dealer will be obligated to pay the claim up to the bond’s penal sum.

Bonding company’s provide legal defense on your behalf; often leading to a winning verdict on your behalf.  It should be understood that if they end up paying the claim due to the dealerships negligence the legal fees plus the amount of the claim will need to be reimbursed.

Protect yourself and your dealership

Claims do arise against auto dealer surety bonds.  It is important to protect yourself.  Be sure that your dealership follows all industry regulations.  If you are honest in your dealings with customers you have nothing to be worried about.

Keep all licenses up to date, renew bonds on time and file all necessary paperwork diligently.  If a claim happens to arise you will easily be able to plead the case against the dealership without hurting business.

Construction Bonding Specialists, LLC are dedicated Surety Bond Professionals that are aligned with several Treasury Listed and AMBest Rated Surety markets which allows them to assist with virtually all Bid, Performance and Payment, Financial Guarantee and Supply bond needs.  Find out more information at https://www.bondingspecialist.com.

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Major Points Of The Claim Process In Auto Dealer Surety Bonds

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To avoid confusion we will discuss some of the major points of the claim process in auto dealer surety bonds.

Surety bonds are not the same as an insurance policy.

A surety bond protects the consumer not the business.  The surety bond is an agreement that outlines an obligation of one of the parties, in this case the car dealer, to another, their customer, which is watched carefully by a third party, the surety company.  If there is a claim against the car dealer the surety bond company may need to pay the client based on the claim and then seek reimbursement from the dealership.  A car dealership that is bonded is financially obligated to pay back the surety if a claim is paid on your behalf.  No matter how long the dealership has been in business or how long it has been out of business, if a claim is levied against the dealership and the surety is paid the surety company will seek to get reimbursement on the paid claim from the dealership.

Eight of the most common bond claims that arise from used car dealerships.

–          Failure to account for the sale and/or supply a valid title as stated under the contract

–          Writing a check that does not clear or to not make a payment on a vehicle

–          Tampering with the automobiles odometer

–          Providing inaccurate or false information in regards to the cars past and current condition during the sale

–          Fraudulent activity in regards to the financing of the car

–          Selling vehicles that have been stolen

–          Failing to pay for the warranty that was purchased by the consumer

–          The inability to honor the written car warranty

In our next installment we will finish discussing the major points of the claim process in auto dealer surety bonds.

Construction Bonding Specialists, LLC are dedicated Surety Bond Professionals that are aligned with several Treasury Listed and AMBest Rated Surety markets which allows them to assist with virtually all Bid, Performance and Payment, Financial Guarantee and Supply bond needs.  Find out more information at https://www.bondingspecialist.com.

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Congress Tightens Surety Asset Rules

In the news

The defense authorization also expands SBA-backed surety bonds

Tucked into the defense authorization passed by Congress Monday are little-noticed amendments that should eliminate much of the fraud that has characterized individual surety bonds and expand the Small Business Administration’s flexibility in backing bonds for small contractors.

The surety measure tightens up the rules for using individual sureties on federal projects by requiring the assets backing the bonds to be real and deposited into an account that is in the care of the federal government.

The measure also expands the SBA’s ability to back bonds under its guarantee program, from 70% to 90% of the loss paid by a participating surety, on a contract amount up to $6.5 million.

The amendments are contained in Section 874 of the National Defense Authorization Act, which President Obama is expected to sign. Major industry associations, including the Surety & Fidelity Association of America and the National Association of Surety Bond Producers, backed the measures.

NASBP, which has battled individual sureties in court and in legislatures, views the passage as a major victory for the association and the industry.

“We are confident now our five years of toil to curb individual surety abuses on federal construction contracts are paying off,” said Mark McCallum, NASBP’s chief executive.

Rep. Richard Hanna (R), a former contractor whose district is in central New York State, was a key sponsor.

ENR’s investigations of individual sureties in 2013 revealed extensive use of deceptive assets.

Original Source: https://www.enr.com/articles/37939-congress-tightens-surety-asset-rules-with-eye-on-individual-surety-fraud

Richard Korman
November 12, 2015
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Carwash Owners Sue NYC Over New Surety Bond

In the news

A group of carwash owners have filed a lawsuit against New York City charging a new law illegally favors unionized carwashes.

The Association of Car Wash Owners lawsuit centers on rules that require owners of nonunionized carwashes to post $150,000 surety bond before obtaining a license. Unionized operations pay only $30,000.

The association says the two-tiered system is illegal.

Association attorney Michael Cardozo tells The New York Times the rule gives those who have collective bargaining a competitive edge.

He says “governments can’t put their thumb on the scales of whether a company should unionize or not unionize.”

The union-supported Car Wash Campaign, which represents community groups, said the $150,000 bond is “designed to secure worker wages against wage theft, and to protect consumers and possible creditors.”

The city Law Department says it will review the merits of the complaint but believes the law serves to protect low-wage workers.

Original Source: https://www.insurancejournal.com/news/east/2015/10/22/385822.htm

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