What is a License and permit bond ?

License and permit bonds are considered  surety bonds. A  municipality will require certain business or individuals to obtain these surety bonds. Theses bonds are required  in order to guarantee that the principal will carrier out their duties, laws as well as anything else that is in the bond form.  If the principal breaches the contract stipulated in the surety bond form and a  bond claim occurs the surety will reimburse the  obligee and than collect the funds from the principal.

How is a Surety bond underwritten ?

Surety license bonds are underwritten just like any other surety bond. The Surety will review your credit, personal financials as well as your business financials to determine surety credit.

How many license bonds are there, and who requires them?

It is  almost impossible to count how many license bonds are out there.  Each city has their own license bond requirements for certain business industries as well as individuals. A city can determine by their on accord if they want someone or business to 0btain a surety bond.  For instance the city of South Houston requires car dealers to obtain a $25,000 surety bond to sell cars even though there is already a bond requirement from the state.

Some cites require license and permit bonds to remodel your home or easements on your property. License bonds can also be required from the state as well.  Some of the most common license bonds required by the state are contractor license bonds.

The federal government also requires license bonds such as a ICC bond. If you are going to provide  construction services for the federal government they will require that you are bonded with the state and carrier your contractor license.  The other bond that they will require is a payment and performance bonds.

You can find out more about payment and performance bonds as well as other surety bonds on our surety bond blog