License and Permit Bond


A license and permit bond is a surety bond that is usually required for any party who wishes to obtain a license or permit for a specific activity, such as opening a business. These bonds ensure the party attempting to obtain a license or permit will follow local, state, and federal laws and guidelines for their activities.

When is a License and Permit Bond Required?

License and permit bonds may be required for many activities that would require the involved parties to obtain a license or permit to participate:

  • Contractor’s licenses ensure that contractors (electricians, plumbers, and general contractors) adhere to the laws of their fields.
  • Customs bonds relate to import duties and taxes paid on international goods and ensure that businesses follow import/export laws.
  • Auto dealer bonds ensure that any business buying and selling motor vehicles must follow regulations governing motor vehicle transactions.
  • Reclamation bonds exist for environmental protection and ensure that the parties performing reclamation work operate legally and do not harm the environment.
  • Broker’s bonds relate to mortgages, title agencies, and insurance policy providers.
  • Health spa bonds help assure that spas follow all laws that apply to their field.
  • Tax bonds ensure that the business owner will pay all applicable taxes.

The purpose of license and permit bonds is to ensure that the party applying for a license or permit does so legally, and uses the permit or license within the boundaries of local, state, and federal regulations.

License and permit bonds can be configured to include coverage for any injury or damages resulting from the bondholder’s activities. For example, a business owner may be required to purchase a permit for an outdoor sign, and the permit bond will have guarantees for indemnity should the business sign fall and injure someone.

If you have questions regarding license and permit bonds, feel free to contact Smith Bond and Surety for a consultation.

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