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Army Veteran Owned | Expert Surety Bonds Since 2004
Have a question? +1 815-826-6324 (815-8-BondAI) phil@AmericasSuretyBonds.com
Army Veteran Owned | Expert Surety Bonds Since 2004
This is not a small filing. Arizona sets the Authorized Third Party bond at a minimum of $100,000 for each location, and a sole proprietor or partnership signs it personally as principal. Get the per location math right before you quote a second office, then file the bond on ADOT form 96-0101 with your application. A surety bond lets you meet that requirement for an annual premium rather than tying up $100,000 or more in cash.
Arizona Revised Statutes 28-5104 requires a business applying to ADOT Motor Vehicle Division to become an Authorized Third Party to file a surety bond of at least $100,000 for each location, with the State of Arizona as obligee. Sole proprietors and partnerships use ADOT form 96-0101, which names the individual or the partners as principal. Government bodies, licensed and bonded dealers, large fleets and several other groups are exempt.
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A.R.S. 28-5104(A) requires a bond of at least $100,000 for each location. Two offices means at least $200,000 in bond coverage. The figure is a minimum, so ADOT can approve a bond for more.
A third party that performs both driver license skills and written testing and driver license processing is authorized under A.R.S. 28-5101.01 and carries a larger bond: at least $300,000 for initial authorization plus $100,000 for each additional location, up to $1,000,000. A towing company employee who applies only to perform level one vehicle inspections posts a bond of not more than $25,000 that covers every location. A driver license training provider authorized under 28-5101.02 does not submit a bond.
ADOT form 96-0101, the Third Party Bond, has business type boxes for an individual, a partnership, a corporation and several LLC and LLP forms. For a sole proprietor or partnership the principal is the person or the partners, and the form includes a Business Company Name line for those two types and signature lines for each partner. ADOT's application instructions say the application must be signed by the individual, all partners, or an officer of the corporation.
The State of Arizona is the obligee and a surety authorized in Arizona executes the bond. Under 28-5104(C) it protects any person who suffers a loss from:
The surety's total liability is capped at the bond amount. The bond cannot be cancelled without at least 60 days notice to the ADOT director, and the surety's future liability ends when the director terminates the authorization.
Under 28-5104(E) the bond does not apply to a state department, agency or political subdivision, a state court, a state law enforcement agency, a financial institution regulated by the Department of Insurance and Financial Institutions or a federal monetary authority, the federal government, a motor vehicle dealer licensed and bonded by ADOT or by a state organization of licensed and bonded dealers, a licensed manufacturer, importer, factory branch or distributor, an insurer under DIFI, an owner or registrant of a fleet of 100 or more vehicles, a public utility, a tribal government, and an employer or association with at least 500 employees or members. Exempt applicants file the Third Party Bond Exemption Form, 96-0517, instead.
The bond goes to ADOT Third Party Administration, Mail Drop 532M, PO Box 2100, Phoenix AZ 85001-2100. ADOT's process starts with the Third Party Authorization Interest form, 96-0151, plus a business plan and training plan. ADOT says that review takes about three weeks and the formal application about 45 business days, followed by a site inspection that requires a certificate of occupancy. ADOT also publishes separate ATP insurance requirements, and the bond does not take their place.
The surety prices the bond after underwriting the owner or partners, their credit and the business. At this bond size, expect the surety to look closely at each principal.
At least $200,000. A.R.S. 28-5104(A) sets the bond at a minimum of $100,000 for each location.
Yes. A third party authorized under A.R.S. 28-5101.01 to do both driver license testing and processing posts at least $300,000 for initial authorization and $100,000 for each additional location, up to $1,000,000.
The partnership is the principal, and form 96-0101 has a signature line for each partner. ADOT also requires the application to be signed by all partners.
Yes. A.R.S. 28-5104(E) exempts government bodies, state courts and law enforcement, regulated financial institutions and insurers, ADOT licensed and bonded dealers, licensed manufacturers and distributors, fleets of 100 or more vehicles, public utilities, tribal governments and employers or associations with at least 500 employees or members. Exempt applicants file form 96-0517.
That customer can claim against the bond. It covers losses from nonpayment of fees or taxes paid to the third party, from insolvency or closing the business, and from failing to perform third party duties, up to the bond amount.
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