Indiana Vehicle Distributor Bonds - A big car lot in the background. A see through overlay of an Indiana American Flag over the cars. A text box that reads, "Indiana Vehicle Distributor Bonds".

Vehicle Distributors in the State of Indiana need to obtain a license from the state and an Indiana Vehicle Distributor Bond (Vehicle Merchandising Bond).

Who Needs to Be Licensed and Bonded?

Indiana Code 9-13-2-45 defines an Vehicle Distributor as, “a person, other than a manufacturer, that is engaged in the business of selling motor vehicles to dealers located in Indiana. The term includes a distributor’s branch office. The term does not include a recreational vehicle manufacturer.”

You only need a Distributor Representative Certificate if you are acting on behalf of a Distributor. There are many license requirements to becoming a Vehicle Distributor in Indiana. You can read more about those requirements here.

Who Are the Parties to an Indiana Vehicle Distributor Bond?

These surety bonds are a three-party guarantee. The Vehicle Distributor is the Principal on the bond. The Obligee is the party requiring the bond and who gets the direct benefit of the guarantee. On this bond, the Obligee is The Indiana Secretary of State Auto Vehicle Services Division. The Surety is the bond company who is guaranteeing the obligation of the bond.

Parties to an Indiana Vehicle Distributor Bond - This chart shows the three way relationship between the surety bond company, the state of Indiana and Vehicle Distributor. I has an Indiana Map in the background with a black car in the middle.

What Does the Indiana Vehicle Distributor Bond Guarantee?

The surety bond guarantees that the Vehicle Distributor will comply with all laws, ordinances and resolutions that govern the issuance of the License issued by the Indiana Secretary of State. You can read more about these responsibilities here. A person may file a claim against the Vehicle Distributor for violating the provisions. The State requires that notice be given, an opportunity for a hearing and an opportunity for judicial review. The bond secures damages for a person who is affected by a violation of the Vehicle Distributor after a judgement has been issued. The bond also helps secure payment of fines, penalties, costs, and fees assessed by the Secretary of State.

Amount of the Indiana Vehicle Distributor Bond

The State of Indiana requires that Automobile Distributors maintain a surety bond in the amount of $25,000.

Bond amount for Indiana Vehicle Distributor Surety Bond - Shows the required bond amount of $25,000. A picture of a car lot to the left. Red background

How to Obtain an Indiana Vehicle Distributor Bond

These bonds are very easy to obtain and can be purchased instantly below by most Auto Distributors. Most surety bond companies do require a credit check for these bonds. MG Surety works with 25+ bond companies and can help Vehicle Distributors of all circumstances. We even have options for those with credit challenges.

What is the Cost of an Indiana Vehicle Distributor Bond?

Many surety bond companies charge 1% or $250 per year for these bonds. We do work with bonds companies with even better pricing, but you must call and qualify for preferred pricing.

Length of the Bond

The Indiana Vehicle Merchandising Bond for Distributors is continuous for as long as the Vehicle Distributor is licensed. That means the surety bond will need to be renewed each year. That also means that the bond premium will be due each year that the bond is in force.

Cancellation of the Bond

The Surety may cancel the bond by giving thirty days written notice to the Obligee and the Principal. The notice of termination does not become effective until the Secretary of State receives the notice at their office which is currently:

302 West Washington Street

Room E-111

Indianapolis, IN 46204

The Surety is still liable for actions violations committed while the surety bond was in existence and during the thirty-day notice period. If the Surety cancels the bond for any reason, the Vehicle Distributor will need to secure a replacement bond from another surety bond company or risk having their license suspended.

Indemnity is Required

Like most surety bonds, Indiana Vehicle Merchandising Bonds require indemnity. These bonds are not insurance and the surety bond company will seek reimbursement from the Vehicle Distributor and any other indemnitors if they must pay a valid loss. You can read more about indemnity here. Claims against the bonds should be avoided.

Indiana Vehicle Merchandising Bonds are required by the State. Fortunately, these surety bonds are easily obtainable for most Vehicle Distributors and can be purchased instantly. Vehicle Distributors may also need other Indiana Surety Bonds. Many of those can also be purchased directly here. Contact MG Surety Bonds anytime with questions. Our surety bonds experts are standing by to help. You can also visit our FAQ Page for Surety Bonds and our Blog for educational surety bond topics.