Surety Bonds vs Insurance

Surety bonds and insurance are two completely different terms. Simply put, an insurance protects your business and surety bonds protect the public. If you want to get Bonded and Insured, the insurance aspect would most likely refer to Fidelity Bonds, which protect your business from employee dishonesty.

What is a surety bond?

A surety bond is a three-sided contractual agreement guaranteeing that a business or individual will fulfill their obligations under a contract and in accordance with business regulations. The three parties involved in the surety bond agreement are the obligee (the party requesting a surety bond), the principal (the party obtaining the bond) and the surety (the surety company backing the surety bond financially).

How Surety Bonds Work  To get bonded, you pay only a small percentage of the bond amount, which is called a bond premium. This percentage is different for every applicant and it is based on different factors, such as the type of bond you need, your credit score, financial statements and more. Call us to get a ballpark estimate of how much your bond might cost.

A Motor Vehicle Bond (sometimes called an auto dealer bond, DMV Bond, MVD bond, or car dealer bond), guarantees that the new or used auto dealer complies with all applicable federal, state, and local laws, tax, licensing guidelines and other conditions pertaining to managing a motor vehicle dealership.  The surety bond protects consumers in the event the dealer (surety bond customer, or principal) engages in fraudulent practices, misrepresentation or other wrongful acts.  Some examples of a dealer's actions that may result in third party damages and a surety bond claim include:

  • Delivering an invalid or fraudulent certificate or title
  • Neglecting to pay motor vehicle fees
  • Misrepresentation or other unethical business practices
  • Failure to make sales tax payments to the state government
  • Get an Oregon Auto Dealer Bond

As described earlier, one of the major requirements that you need to meet to get your Oregon dealer license is to post an auto dealer bond.  For most dealers, this means obtaining a $40,000 Oregon Auto Dealer Bond. 

Keep in mind that bonds are different than insurance.  The auto dealer bond is an extra layer of protection for your customers and the state that guarantees your dealership will follow applicable rules.  To get bonded you need to pay a fraction of the bond amount, called the bond premium . This is your surety bond price.  The typical percentages are in the range of 1%-3% of the required amount (in case of good credit score.)

How is your bond cost formulated?  When you apply for a bond, your surety will examine your personal and business financials.  These could include your credit score, business financials, professional experience, as well as assets and liquidity.  On the basis of these factors, it will determine the level of risk that the bonding company would take on.  If you can demonstrate a low level of risk, you can expect a lower bond price.  

Some bonds we handle include, but are not limited to, the following:   

  • Contract performance bonds
  • Bid bonds
  • Maintenance bonds
  • Payment bonds
  • Supply bonds
  • License and permit bonds

When you have questions DMV can be reached at

Hecht and Hecht has been in the insurance business and writing bonds since the 1970s.  We have experience providing bonds in Portland, Oregon, Washington, and the Pacific Northwest.  Auto Dealer bonds are our specialty.  If you need a bond for your car Dealer business, Hecht and Hecht is the place to go.  If you need a Dealer Bond to get your license, come to us.  We can provide your Dealer bond and help guide you through the DMV process.


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