What is a car wash bond?
Car wash bonds are a type of license and permit bond ensuring that car wash businesses follow labor laws, industry standards, and ethical practices. New York City and California both require car wash bonds. The bond offers protection for employees, ensuring employers fulfill their obligations, including paying:
- Minimum wage (at least)
- Earned wages
- Fringe benefits
- Interest on wages
Who needs a car wash bond?
If you want to operate a vehicle cleaning, polishing, washing, detailing, or similar service in the state of California or New York City, you will need a car wash bond.
Get Your Car Wash Bond:
- Car wash bonds ensure that car wash, cleaning, polishing, and detailing businesses follow labor laws and industry standards.
- New York City and California require car wash bonds.
- Your bond premium could be 1% or less of the bond amount if you have excellent credit.
- In New York City, the required bond amount may be either $30,000 or $150,000. In the state of California, you’re required to obtain a bond for $150,000.
How do car wash bonds work?
Car wash bonds protect employees – legally and financially. When you acquire your bond, you agree to pay and treat your employees fairly and honestly and abide by applicable labor laws. The bond will remain in effect unless canceled or terminated.
A car wash bond is an agreement between three parties:
- Obligee: State or regulatory agency requiring the bond
- Principal: Car wash business that must obtain the bond to operate legally
- Surety: Financial institution that underwrites, issues, and backs the bond
If an employee believes their employer has broken the bond contract, they may file a claim on the bond. If the surety decides that the claim is valid, they must reimburse the claimant for their loss. The car wash business will then be responsible for paying the surety back.
To avoid a claim on your bond, ensure you pay your employees their wages and benefits in full. If someone files a fraudulent claim against your business, your surety may help you fight the claim in court. Document any communication with the claimant to use as evidence in your case.
How much do car wash bonds cost?
The value of your surety bond is different from the amount you pay (your premium). You will pay a small percentage of the total bond amount to obtain your bond. The bond premium could be 1% or less of the bond amount if you have excellent credit.
In the state of California, you are required to obtain a bond for $150,000. In New York City, the required bond amount could be either $30,000 or $150,000. The only reason your business may need the $30,000 bond is if it’s “a party to a current collective bargaining agreement” or “you are covered by an active monitoring agreement.” The bond must cover the licensing period.
If you have bad credit, some surety bond providers may turn down your application. Others will offer you the bond you need for a higher premium (possibly up to 10% of the bond amount).
Here’s an example of what may be required to become a licensed car wash business:
- License application
- Car wash self-certification
- Copy of your surety bond (signed)
- Sales tax ID number or your application confirmation number
- Proof of commercial general liability insurance
- Proof of workers’ compensation insurance
- Proof of unemployment insurance
- Proof of disability insurance
- License fee
- Granting authority to act affirmation (if needed)
See the NYC Consumer and Worker Protection website for more car wash license details.
Get a Car Wash Bond in Your State
ZipBonds offers the fastest and most secure option for getting the surety bonds you need. Our all-digital platform is intuitive and straightforward. Apply online or call us at 888.435.4191 to speak with an agent directly. Most of our bonds are approved and processed instantly from our site.
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.