Surety bonds for auto dealers
Most Canadian provinces require auto dealers to post a dealer bond. This involves selling, leasing, and trading of new and used vehicles. If you are amid planning a dealership startup, you will need to contact the appropriate government entity. If you sell 5 vehicles or more a year, you are classified a dealer in Canada, but this does not mean that you will not need a dealer license and bond, if you commence to sell less. Below, you will discover a few simple strategies to avoid surety bond claims.
Bonded companies are always going to be at risk of having a claim filed against their bond. Not only are these claims devastating to your company, but if the claim is validated, you will find it nearly impossible to conduct further business. The bond company will pay the complainant the full amount of the bond and you will be forced to repay the surety Bond Company. This will be a devastating monetary loss, plus your reputation will be ruined. In many cases, the business owner will find it nearly impossible to get approved for another bond.
Fight The Claim
It is a fact that many claims filed against surety bonds are illegitimate, but this does not make them any less stressing. Nine times out of ten, the complaint will revolve around timing, but this is not always the case. If you, as the principal of the bond, feel that the claim is fraudulent, you can fight the claim. Provide efficient proof to the surety company and speak on your behalf. Never, just take these allegations lying down, if you are not at fault.
Communication Is Key
At the time, the client voices a complaint against your company you should immediately open up a door of communication. Early communication is the key to preventing the problem from becoming work and if you can resolve the issue now, you could save yourself a lot of grief later on down the road. Most complainants are open to reason, so do not pass this opportunity up.
Several types of surety bonds will set up a meeting at the first admission of default. The principal, obligee, and surety claims professional will need to attend the meet. This meeting will address any problems that the contractor may be experiencing, in trying to fulfill the terms of the contract. Many times, these meetings are scheduled due to lack of funds, which can be remedied by the obligee making future payments. These joint checks will be used to fund the project, so it can be completed in a timely manner.
In order to be approved for a dealer license, you will need to post a surety bond first. When completing the licensure application, you will need to attach a copy of the bond and submit it along with the application to the business licensing board.
One of the best ways to avoid surety bond claims is to comply with the provincial and territorial statues pertaining to your dealer licensure. Of course, this will not be a guarantee protection from claims, but it will definitely be a great place to start.