Massachusetts Motor Vehicle Repair Shop Bond
What is a motor vehicle repair shop surety bond?
Massachusetts requires all motor vehicle repair shops to register with the state. Along with your application, you will have to post a surety bond to complete this process.
The purpose of this bond is to encourage auto repair shops to obey state laws and act ethically with their customers. Unlike insurance, which protects you and your business, a surety bond helps protect consumers.
A bond acts as a contract between three parties:
- The obligee: The state or local authority requiring the bond.
- The principal: The repair shop posting the bond.
- The surety: The company issuing the bond.
How does the motor vehicle repair shop bond work?
In the event your auto repair shop violates a law or regulation, a claim can be made against your bond. If this occurs, you may be required to pay fines or penalties to the state in addition to paying any losses suffered by the claimant.
If the claim against your bond is upheld by the court, it will be used to pay fines, fees, and any losses suffered by the claimant. You will then have to pay this amount back to the surety company.
Upheld claims can make obtaining a new bond difficult. As Massachusetts requires a bond to register a repair shop, this can also put your business license at risk.
In this way, a bond not only provides compensation to consumers, it also encourages lawful operation by vehicle repair shops.
How much does a vehicle repair shop bond cost?
Massachusetts requires all registered auto repair shops to post a $10,000 surety bond; however, you will not need to pay the full amount of the bond in order to receive a policy. Instead, you only have to pay a small percentage of the full amount to the surety provider. This amount is known as the bond’s premium.
Premium rates can vary from as low as 1% to as high as 15% based on several factors, including:
- The credit rating of the applicant
- The bond amount
- Your business's finances
NNA Surety Bonds offers $10,000 MA motor vehicle repair shop bonds with annual premiums as low as $100 based on your credit history and business financials.
Why does my auto repair shop need a bond?
You will be unable to legally register your auto repair shop without posting a $10,000 bond. Massachusetts requires this bond as a way to promote legal and ethical practices by repair shops and to protect consumers.
Bonds are important tools that help encourage professionals to fully understand and uphold the laws and regulations guiding their industry.
How do I register my auto repair shop in Massachusetts?
Registering your repair shop with the state includes the following steps:
- Download and complete a Motor Vehicle Damage Repair Shop Application.
- Include the $450 registration fee (check or money order) with your application package.
- Include your $10,000 surety bond.
- Provide two letters of recommendation.
- Send a copy of the declaration page of your company’s workmen’s compensation insurance policy.
- Provide a letter from your licensed appraiser stating that they're employed by you.
- Submit the signed application and bond form.
More information, including all necessary forms, can be found on the Commonwealth of Massachusetts website.