In most states, the department of motor vehicles provides services such as auto title transfers, vehicle registration, and driver's license renewals. In Maryland, however, these tasks are carried out by independent retail agents called title service agents or auto tag distributors.
This $50,000 title service agent bond ensures that tasks involving driver and vehicle records are performed accurately, and provides redress to the state or individuals if they are not. Unlike insurance, a surety bond protects the customer rather than the company performing the service.
The Maryland Motor Vehicle Administration (MVA) requires you to post a surety bond as a condition of being properly licensed to offer vehicle tag and title services in the state.
The state sets the bond amount at $50,000, and your annual premium could be as little as $500, which is 1% of the bond amount. The exact price will vary depending on an underwriter's assessment of your financial qualifications, such as personal credit history and industry experience. For applicants with lower credit ratings, one year's coverage could cost up to 10% of the bond amount.
When you apply for a two-year business license to operate as a Maryland title service agent, your application must be accompanied by a $50,000 surety bond. Here are the main items you need to get licensed:
Before a license can be issued, applicants must attend a business licensing orientation scheduled through the state's Business Licensing and Consumer Services Division.
You can find more details in the Maryland Business Licensing Packet, which contains title service agent license application instructions.
A surety bond is a binding legal contract among three entities: the principal (you, the title service agent), the obligee (in this case the Maryland MVA), and the surety (the insurance carrier underwriting the bond).
You can avoid claims by abiding by the terms of the contract. However, in the event that a claim is filed, the surety steps in to investigate. If a claim is upheld, the surety company extends compensation to the injured/affected party, and you must then repay that amount to the surety.
To learn more about becoming a title service agent and distributing auto tags in Maryland, check out the resources below.