surety bond type
License & Permit Surety Bonds
License and permit surety bonds ensure businesses operate legally, ethically, and in compliance with regulations. They protect the public, hold businesses accountable, and are a requirement in countless industries. If your business needs a license to operate, chances are you’ll also need a license and permit bond.
What are License & Permit Surety Bonds?
License and permit surety bonds are a sub-category of commercial surety bonds that specifically deal with obtaining the required licensing or permitting to legally conduct business. A wide range of industries—from construction and auto dealerships to mortgage brokers and freight companies—may be required to secure this type of bond before they can begin operations.
Simply put, a license and permit bond guarantees that businesses will comply with all applicable federal, state, and local laws. By requiring these bonds, government agencies ensure accountability and protect the public from potential fraud, negligence, or unethical business practices.
License and permit bonds are essential for both businesses and consumers:
- For businesses: They demonstrate financial responsibility, compliance, and credibility. Many industries cannot obtain or renew a license without the proper bond.
- For government agencies: They serve as an enforcement tool to ensure businesses follow industry regulations.
- For consumers: They provide a layer of protection if a business acts dishonestly or fails to meet legal obligations.
If a business violates the rules of its license or permit, a claim can be filed against its license bond. The surety company may compensate the affected party, and the bonded business must reimburse the surety.
Who needs License & Permit Surety Bonds?
A wide variety of industries are legally required to carry license and permit bonds before they can operate. Common examples include:
- Contractor license bonds – Required for construction professionals to ensure compliance with building codes and regulations.
- Auto dealer bonds – Required for vehicle dealerships to guarantee ethical sales practices.
- Freight broker bonds (BMC-84) – Required for freight brokers to ensure payment obligations to carriers and shippers.
- Mortgage broker bonds – Required for mortgage professionals to protect borrowers from fraud or misrepresentation.
Whether you’re opening a dealership, starting a construction company, or operating in a regulated financial field, a license and permit bond may be mandatory.
Download Our Free Surety Bond eBook: A Buyer’s Complete Guide to Surety Bonds
Your essential, step-by-step guide to understanding what a surety bond is, who needs one, and how to secure the right bond with confidence. Inside, you’ll learn the purpose of surety bonds, the roles of the principal, obligee, and surety, the different types of bonds and their uses, application steps, required documents, how pricing and approvals are determined, and practical tips to help first-time buyers avoid delays or denials.
How much do License & Permit Surety Bonds cost?
The cost (premium) of a license and permit surety bond depends on several factors:
- The bond amount required by the government agency
- The applicant’s credit score and financial history
- The type of industry and associated risks
In most cases, premiums range from 1% to 10% of the bond amount. Applicants with strong credit may qualify for lower rates, while higher-risk applicants may pay more.
Ready to get bonded?
-
1. Contact us and we’ll email you an application form.
Fill out the application form and email it back to us. You may also be asked to provide documents related to the bond.
-
2. Our underwriting team will evaluate your application.
Each bond has its own unique risk and our team will guide you through the process to get your bond approved.
-
3. Pay for the bond premium and we’ll send the bond to you.
Make the payment for your bond and we’ll issue your surety bond to you immediately!
Share this!
Explore License & Permit Bond Articles
What Happens If Your DMEPOS Bond Is Denied or Canceled?
