Paul Sanchez
A security insurance bond on a vehicle, also known as a certificate of title bond, is a type of surety bond that allows an individual to claim ownership and register a vehicle when the original title has been lost, stolen, or is missing. This bond acts as proof of financial responsibility and helps meet the state's insurance requirements. It is often required when transferring ownership of a vehicle or registering a vehicle without the necessary documentation. The bond amount is typically based on the appraised value of the vehicle and may vary across different states.
| Characteristics | Values |
|---|---|
| Alternative name | SR-22 policy |
| Purpose | Proves the driver has at least the state minimum liability coverage |
| Required for | Verifying to the state the driver's financial responsibility when driving a vehicle after obtaining a citation for a DUI/DWI or driving without insurance |
| Bond value | Typically 1.5 to 2 times the vehicle's value as determined by the DMV |
| Bond period | Varies; some states allow the bonded title to be challenged up to several years after the issue date |
| Bond payment | Required upfront and refunded upon satisfactory return of the vehicle |
What You'll Learn
Bond insurance vs SR-22 insurance
Bond insurance and SR-22 insurance are often used interchangeably, with SR-22 being a type of bond insurance. However, in some states, an SR-22 is a surety bond or a deposit.
SR-22 Insurance
An SR-22 is a certificate of financial responsibility that may be required by a driver's state or court order. It is not a type of insurance but a form filed with a driver's state to prove that their auto insurance policy meets the minimum liability coverage mandated by the state. An SR-22 is often required for drivers convicted of offences such as DUI, driving without insurance, or multiple traffic violations. It serves as a guarantee that the driver will maintain the required insurance coverage for a specified period.
Bond Insurance
Bond insurance is sometimes used as an alternative term for SR-22 insurance. However, in some states, bond insurance is a surety bond or deposit. A surety bond enables a person to claim ownership of a vehicle and register it when the title has been lost, stolen, or misplaced. The owner receives a bonded title for the duration of the bond period, and the title is fully transferred to the owner when the bond period ends.
SR-22 vs Bond Insurance
While SR-22 insurance and bond insurance are often the same thing, there are instances where they differ. SR-22 insurance is always related to drivers proving their financial responsibility, while bond insurance can also be used by vehicle owners to claim ownership. Additionally, SR-22 insurance is filed with the state, while bond insurance is provided by a licensed surety lender.
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When do you need a surety bond?
A surety bond is needed when there is an inability to establish ownership of a vehicle and transfer the title. This could be due to a number of reasons, including:
- Buying a car and not receiving the title during the purchase, such as at an auction, estate sale, or through inheritance.
- Purchasing a car and finding out that the title is assigned to the wrong person.
- Buying a car with a normal title but losing it before it gets transferred.
In the context of vehicle ownership, a surety bond enables a person to claim ownership of a vehicle and register it when the original title has been lost, stolen, or misplaced. The owner receives a bonded title, which gives them the same rights as a standard vehicle title, for the duration of the bond period. At the end of the bond period, the title is fully transferred to the owner.
It is important to note that a surety bond should only be obtained for a vehicle if one can legally prove ownership. This can be done by running a VIN check and gathering sufficient evidence to support the claim of legal ownership.
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How to obtain a surety bond
A security insurance bond, or SR-22, proves that a driver has at least the state-required minimum liability insurance. This is usually required when a driver has been cited for driving under the influence or without insurance.
A surety bond is different from an SR-22. A surety bond enables a person to claim ownership of a vehicle and register it when the title has been lost, stolen, or misplaced. The owner receives a bonded title for the duration of the bond period. The title is fully transferred to the owner when the bond period ends.
- Determine which bond you need: The bond you need will depend on your business or personal circumstances as well as your location. There are thousands of surety bond types for various permits, court proceedings, business licenses, and more.
- Gather your application information: Once you find the bond you need, you will need to provide your official business name, address, and ownership information. If you are renewing your bond, you will also need to know your professional license number. Some applications will also require additional documentation, such as a personal financial statement, homeownership status, or a resume to demonstrate industry experience.
- Purchase your bond from a surety agency: Surety agencies work directly with bond carriers to match applicants with the best available rate. Some bonds can be purchased instantly online, while others require an application to determine eligibility and the premium rate.
- File your bond with the obligee: Your obligee will require a bond form with either digital signatures and seals or wet signatures and a raised seal from the surety provider. The account managers will confirm if your obligee requires digital or physical delivery. Either way, you must sign your bond and submit it to the obligee to become officially bonded.
It is important to note that eligibility and pricing for surety bonds depend on certain qualifications, such as credit score and financial history. Additionally, not all surety agencies are licensed to operate in every state, so be sure to select an agency that is approved and licensed for your state.
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What happens when a surety bond claim is successful?
A surety bond is a guarantee that the principal, or the company or organisation that needs a bond to work within a particular industry, will meet certain requirements. If a valid claim is made against the surety bond, the principal is obligated to pay the full amount of the bond.
When a claim is made, the surety company will first investigate the allegations to determine their validity. If the claim is found to be invalid, the surety company will deny it in writing. If the claim is valid, the surety company will inform the principal of its findings and notify them of their obligations under the indemnity agreement and bond. The principal will then need to resolve the claim, provide a valid defence, or compensate the claimant for their damages.
If the principal fails to take any of these actions, the surety company may satisfy the claimant's demands directly and then seek reimbursement from the principal, including any associated legal costs.
It is important to note that a surety bond is not the same as an insurance policy. While an insurance company does not expect to be reimbursed for a claim, a surety company does. The principal is responsible for cooperating with the surety company throughout the entire claim process and reimbursing them for any payouts made on the claim.
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Alternatives to getting a bonded title
A bonded title is a type of surety bond that establishes you as the legal owner of your vehicle. It is a legal document that substitutes for the original vehicle title. A bonded title is typically issued if the original goes missing, is damaged, or is otherwise unavailable.
Court Order
In some cases, you can obtain a court order declaring you the rightful owner. This typically involves filing a lawsuit and providing evidence to support your claim of ownership. The court will evaluate the case and issue a ruling accordingly.
Abandoned Vehicle Process
If you come across an abandoned vehicle and wish to claim ownership, you can follow the abandoned vehicle process established by your state. This typically involves reporting the car to the appropriate authorities, completing the required paperwork, and waiting for a specified period before obtaining ownership.
Spouse or Child of the Owner
In certain states, you may be able to transfer ownership of a vehicle with a bonded title if you are the spouse or child of the current owner. This option may be available to you if you meet the relationship criteria and the owner is willing to transfer ownership.
Replacement Title
If your title is lost or destroyed but your name is on the title, you may be able to obtain a duplicate title from your local DMV. This option may be available if you can provide the necessary information and meet the requirements of your state's DMV.
Bill of Sale
If you have a Bill of Sale without an accompanying title and there are no liens on the vehicle, you might be able to apply for a replacement title at the DMV. The process may vary depending on your state's specific regulations.
Contact Previous Owner
If your name is not on the title or the title has some issues, but you can reach the person whose name is on the title, they should be able to transfer the title to your name. This option may be available if the previous owner is willing to cooperate and transfer ownership to you.
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Frequently asked questions
A security insurance bond on a vehicle, also known as a certificate of title bond, is a type of surety bond that allows an individual to claim ownership of a vehicle and register it when the original title has been lost, stolen, or misplaced.
The purpose of a security insurance bond is to enable individuals to claim ownership of a vehicle and register it, even if they do not have the original title. It also protects against issues such as undisclosed security interests or cases where a duplicate title has been issued.
You would need a security insurance bond if you are unable to establish ownership of a vehicle and transfer the title. This could be due to buying a car without receiving the title, purchasing a car with the title assigned to the wrong person, or losing the title before it is transferred.
To obtain a security insurance bond, you must first ensure that the vehicle has no liens, is not stolen, and is not considered "junk only" by running a VIN check. You then need to contact the DMV to obtain a cash value for the vehicle and find a licensed bond agency to purchase the surety bond. Finally, you submit the bond to the DMV in exchange for a bonded title.
The cost of a security insurance bond varies depending on the value of the vehicle. Many companies provide bonds for vehicles valued at $6,000 or less for around $100. For vehicles valued above $6,000, the premium increases, and extensive underwriting may be required for vehicles worth more than $20,000.
