When should a dealer obtain a new surety bond or increase coverage?

The correct answer focuses on the importance of maintaining adequate surety bonds as part of a dealer's licensing requirements in Colorado. A surety bond serves as a form of financial guarantee to ensure that the dealer complies with state regulations and protects consumers in the event of fraud or failure to meet contractual obligations.

When a dealer is renewing their license, there may be a requirement to review and adjust their surety bond to align with current operational risks. Additionally, if a dealer is expanding their operations—such as moving to a larger facility, increasing inventory, or entering new markets—their risk exposure changes, potentially necessitating a higher bond amount to ensure consumers and the state are adequately protected.

This proactive approach ensures that dealers remain compliant with state regulations and helps to maintain their standing in the community as reliable and trustworthy businesses. Other options do not account for the regulatory requirements and industry standards regarding surety bonds, which are essential for protecting the interests of consumers and the integrity of the dealership.