Dealers commonly need to hold a license and a surety bond to be able to deal, buy, or sell various types of vehicles including recreational vehicles (RVs), motorcycles, mopeds, ATVs, snowmobiles, etc. Motorhome, Motorcycle, Off-Highway Vehicle, or Trailer Dealer Bonds are used to guarantee that customers won’t be left short-changed because a dealer ripped them off.
Surety companies, like Jet Insurance Company, play the role of a third-party guarantor when a regulatory agency requires motorcycle dealers, off-highway vehicle dealers, or trailer dealers to obtain a license bond. As the guarantor, Jet provides a promise (the surety bond) to the public and the regulatory agency that compensation is available should the dealer fail to oblige with the written contract or obligations of their license and causes financial damage.
Jet works against illegal/unethical actions from all sides: by paying valid claims but also protecting our clients from bogus allegations.
Motorhome, Off-Highway Vehicle, Motorcycle, or Trailer Dealer Restricted Actions
As a dealer of RVs, camping trailers, motorcycles, or off-highway vehicles, the license you received from the state you are conducting business in holds certain expectations for the way you operate your business. If you are found in violation of these expectations, you may be subject to more than just a bond claim; the regulator can impose fines, penalties, and even suspend or revoke your license.
The following actions can result in a bond claim or disciplinary action:
- Failure to transfer clean title
- Odometer tampering
- Failure to pay registration, title, fees, or taxes
- Unlawful issuance of vehicle registrations, permits, transfers, or alterations
- Breach of contract
- Failure to keep accurate records
How Claims Are Handled With Jet
Whenever a claim is filed, there are four main parts of the claims process that occur: (1) a complaint, (2) an investigation, (3) a judgment, and (4) recovery and indemnification. Let’s dive into that a little more with an example of how a motorcycle dealer (we’ll call her Jackie) would handle a claim filed by her customer, Matt.
Claims typically start out as a customer complaint, and in many cases, taking these complaints seriously right away can resolve the issue before it turns into a legal mess. A customer will contact the dealer; but if the dealer does not address the issue, the customer can file a formal complaint to the regulator.
Matt bought a motorcycle from Jackie under the advertising that his motorcycle was a 2019 model. Upon further inspection when filing registration paperwork, Matt discovered that he actually had a 2018 model and that he overpaid for his bike. After finding this out, Matt calls Jackie up to see if he can be refunded the difference between the advertised price and the actual cost of his motorcycle. Jackie sticks to her guns and indicates that her records mark the bike as a 2019 model. Matt wants to make sure he paid a fair price, so he files a dealer complaint with the Department of Motor Vehicles.
Upon receiving a dealer complaint, the regulator will investigate the allegations the customer has made. This may include a review of the dealer’s business operations to check if records and titles are kept in agreement with legislation. An investigation may also include a hearing where the dealer has to appear in front of the regulator.
The Department of Motor Vehicles starts an inquiry into Matt’s allegations and requires Jackie to submit records. The Department finds that Jackie’s records were not accurate and Matt’s claim holds up.
Typically, if the dealer is found to be in violation, they will be ordered to provide compensation for their actions; doing so would resolve the complaint and prevent action on the bond. If the dealer refuses to or cannot make payment, the injured customer will file a claim against the bond to be compensated. Jet will always double-check whether the claim is valid but if a regulator has already conducted an investigation and found the dealer in violation, it’s hard to refute that.
Jackie is ordered to refund Matt the amount that he overpaid. But Jackie cannot make the payment, so Matt files a claim on the bond to be reimbursed. Jet will take a look and see if there’s a way to defend Jackie, but the Department’s ruling works strongly in the favor of Matt’s claim.
Recovery and Indemnification
With a valid claim, Jet will be obligated to pay the injured customer for loss or damages from the surety bond; the bond can even cover court costs or attorney’s fees. However, this doesn’t mean that the dealer is able to get away scot-free; as is the standard in the surety industry, the dealer will need to repay Jet (or any other surety company) in the amount of the claim.
The claim is found to be valid and Matt will receive his due payment: the refund he is owed and any court fees that may be covered under the bond. Just like with any surety company, Jackie will need to repay Jet for the amount that was paid out from the bond.
Of course, this is just an example of how claims against recreational vehicle dealers work. Each state that requires the bond will have certain specifications for the claims process. Like in Nevada, an injured customer can seek reimbursement by filing for a bond claim, taking action in civil court, or settling the matter with the dealer. See the chart below to find more information.