California Car & Auto Dealer Bond— $50,000 Under Vehicle Code 11710

Form OL 25 is the standard $50,000 surety bond form required for most California auto dealers under Vehicle Code Section 11710. A surety bond is a three-party agreement that protects consumers — learn the basics in our guide to what a surety bond is (buysuretybonds.com/what-is-a-surety-bond/). The form is filed with the DMV as part of your dealer license application. An autobroker endorsement is a separate addition to an existing dealer license (new, used, or wholesale) that allows the dealer to broker retail sales transactions on behalf of buyers. The autobroker endorsement does not change the bond amount -- your bond follows the underlying license type. Autobrokers also take on additional recordkeeping and disclosure obligations; confirm the current rules with DMV.

Under Vehicle Code Section 11704.5, applicants for a used vehicle dealer license (retail or wholesale) must complete a DMV-approved pre-licensing education program of at least 4 hours and pass a written examination. New vehicle dealers and motorcycle-only, trailer-only, and ATV-only dealers are exempt. The course covers California vehicle laws, DMV regulations, title and registration procedures, advertising rules, consumer protection requirements, and dealer responsibilities. Multiple DMV-approved providers offer the course online (self-paced or live webinar) and in person. After completing the course, you receive a Certificate of Completion that must be submitted with your DMV application. The DMV maintains a current list of approved education providers on their website. For a step-by-step walkthrough of the full licensing process, see our guide at buysuretybonds.com/how-to-get-a-surety-bond/.

Most California dealers carry garage liability insurance, and landlords, lenders, and auction houses commonly require it -- $1,000,000 combined single limit (CSL) is a common policy limit. The dealer bond statute (Vehicle Code Section 11710) sets the bond amount, not an insurance minimum, so confirm any insurance requirement with the DMV and your insurance agent. Garage liability covers bodily injury and property damage arising from dealership operations, including customer test drives, lot operations, and vehicle demonstrations — this is separate from your surety bond (learn the difference at buysuretybonds.com/bond-vs-insurance/). Many California landlords and lenders require even higher limits ($2M aggregate) as a condition of their lease or financing agreements.

After you submit your dealer license application, a DMV Occupational Licensing inspector will schedule an on-site visit to your dealership location. The inspector verifies: (1) the office is a permanent, non-temporary structure actually occupied for business (trailer coaches are acceptable if not part of inventory), (2) a permanent, durable sign displays your exact business name as shown on the application and bond, visible from the nearest public street, (3) the vehicle display area is at the same address and large enough to accommodate vehicles you are licensed to sell, (4) the location has proper city or county zoning for motor vehicle sales, and (5) your record-keeping systems are in place. The inspector also performs background verification on all principals. Your license will not be issued until the location passes inspection.

No. California does not allow home-based retail auto dealerships. The DMV requires an established place of business with proper city or county zoning for motor vehicle sales. Your office must be a permanent structure (not temporary or mobile), you need a display area at the same address large enough for your inventory, and a permanent sign visible from the public street. Residential zones are never zoned for vehicle sales. Zoning requirements vary significantly by city and county across California -- some areas require a conditional use permit even in commercially zoned areas. Before signing a lease, verify with your local planning or zoning department that the specific address is approved for motor vehicle dealer operations. This rule differs from states like Florida (buysuretybonds.com/auto-dealer-bonds/florida/) and Ohio (buysuretybonds.com/auto-dealer-bonds/ohio/) which have their own facility requirements.

California dealer plates (special plates, Vehicle Code Section 11715) may be used only for purposes the Vehicle Code allows -- generally moving and demonstrating inventory the dealer owns or lawfully possesses, including limited test drives by prospective buyers. They are not for general business vehicles such as service trucks or parts vans. Misuse can lead to fines, license discipline, or claims against your $50,000 surety bond. California also requires dealers to attach temporary license plates to vehicles sold without permanent plates. Confirm the current rules in the DMV dealer guidance before relying on them. Visit our learning center (buysuretybonds.com/learn/) for more on bond claims and compliance.

No. Under Vehicle Code Section 11710, dealers who deal exclusively in motorcycles or all-terrain vehicles need only a $10,000 surety bond instead of the standard $50,000. Similarly, under VC 11710.1, wholesale-only dealers who sell fewer than 25 vehicles per year also qualify for the reduced $10,000 bond. If you sell even one non-motorcycle/ATV vehicle, or if a wholesale dealer reaches 25 sales per year, the full $50,000 bond is required. The reduced $10,000 bond is filed on Form OL 25B. Use our auto dealer bond calculator (buysuretybonds.com/tools/calculator/auto-dealer-bond/) to estimate your premium at either bond level.

Licensed car dealers in California. The DMV requires a $50,000 surety bond on Form OL 25 under Vehicle Code Section 11710 before a dealer license is issued or renewed. Dealers who deal only in motorcycles or all-terrain vehicles, and wholesale-only dealers who sell fewer than 25 vehicles a year, file a $10,000 bond on Form OL 25B instead.

Request a quote online. Once your bond is issued, the surety completes DMV Form OL 25 (or OL 25B for the $10,000 bond), and the form is filed with the DMV as part of your dealer license application. Used vehicle dealers also complete the pre-licensing education course and pass the DMV facility inspection.

We submit complete applications to the carrier promptly; most quotes come back within one business day. After you submit your dealer license application to the DMV, a DMV Occupational Licensing inspector schedules an on-site visit to your dealership location.