License & Permit Bonds
License and permit bonds are a sub-category of commercial bonds, which deal specifically with obtaining licensing and permitting to conduct business. License and permit bonds can be used for a wide range of industries and business models.
Simply put, license and permit bonds guarantee that businesses who are required to have a specific license to conduct business will follow all laws and regulations.
License and permit bonds are designed to protect the general public, by holding businesses accountable to the government agency that supplies its license or permit. These government agencies uphold the federal, state, and local laws and regulations surrounding the specific industry.
If a business breaks the rules outlined in their licensing or permitting agreement, claims can be filed against the business’s license and permit bond.
While thousands of unique license and permit bonds exist, here are some of the most common types of license and permit bonds:
For appraisal management companies, this surety bond requires that they operate according to the law.
For auctioneers, this surety bond may be required by the state prior to being legally licensed.
For auto dealers operating anywhere except Ohio and Vermont, this surety bond will be required before being able to sell vehicles to the general public.
For collection agency owners, this surety bond may be required by the state before the company can be legally licensed to collect outstanding debts.
For construction professionals, this surety bond is required in most states in order to build, repair, or renovate any public or private structure.
For suppliers of durable medical equipment, prosthetics, orthotics, and other related materials, this surety bond is required before the company is able to bill Medicare.
For energy broker businesses, this surety bond is often required prior to being able to encourage customers to switch energy providers based upon competitive rates and other factors.
For ocean transportation intermediaries, this surety bond is required by the Federal Maritime Commission as proof of financial security.
For freight brokers, this surety bond is often required at a minimum of $75,000 to ensure that the company operates in line with the agreements and regulations outlined by their motor carriers and shippers.
For businesses that sell fishing licenses, this surety bond guarantees that the company will adhere to the proper regulations, including the timely payment of taxes and fees.
For health clubs, this surety bond guarantees membership fee reimbursement to customers if the company unexpectedly closes or becomes unusable.
For businesses that sell hunting licenses, this surety bond is required by most states before being legally permitted to sell licenses.
For insurance brokers, this surety bond is designed by government agencies to protect the general public against predatory sales practices and other unethical behaviors.
For medical marijuana and recreational marijuana dispensaries, cultivators, processors, and retailers, these surety bonds are required by some states as part of the licensing requirements to conduct business in a lawful manner.
For heath care providers that bill to Medicaid, this surety bond ensures that providers keep accurate records, bill correctly, and handle funds properly.
For professional sports promoters specific to an MMA fighter or event, this surety bond is often required prior to being licensed by some states.
For money transmitter companies, this surety bond must be purchased before the company can be licensed to provide money transfer services or payment instruments.
For mortgage brokers, lenders, servicers, and originators, this surety bond protects clients and is required by most states.
For notary public businesses, this surety bond ensures the professional will follow the regulations surrounding notarizing documents.
For outdoor advertising companies, this surety bond must be purchased in some states before the company is able to install signage.
For payday loan companies, this surety bond guarantees fair lending practices when issuing loans to the general public.
For nursing homes and assisted living facilities, this surety bond ensures that the business and its employees will handle patients’ funds and property appropriately.
For funeral homes, this bond assures that the funeral home is compliant to all applicable laws and regulations and will follow through on all agreements.
For private schools, this surety bond guarantees reimbursement of tuition and other financial recourses if the school closes.
For professional employment organizations, this surety bond is designed to reduce fraud and other instances of malpractice within the industry.
For surplus lines brokers, this surety bond is often required prior to being able to place coverage with non-admitted insurers in a state.
For telemarketing companies, this surety bond ensures compliance to non-harassment and other industry regulations and laws.
For title agencies, this surety bond is required before the company is able to get licensed to search real estate records to determine the legal ownership of properties and find any outstanding financial implications that need to be settled before the property can be sold.
For travel agencies, this surety bond protects clients by ensuring the company will handle their funds properly to purchase elements of the itinerary and other agreed upon costs.
For used car dealers, this surety bond is often required in addition to the auto dealer bond to assure clients that the company is following all laws and regulations related to used car sales.