Different Types of License and Permit Bonds to Know

It is important to understand the role of license & permit bonds before one applies for them. It holds quite an importance in the commercial sector and hence must be understood very well. This type of bond acts like a commercial surety which is needed for the different licensing applications. In almost every business, such a bond is needed for a smoother operation. Such a type of bond is designed to offer a customer monetary remedy when a professional fails to meet the laws that govern such professional. Nearly all states have the requirement of such binding. The business needs to have such a bond before the license shall be issued by state or local authorities.

Different license and permit bonds

There are different types of license & permit bonds that the industry offers for which they are being needed. To name some are:

License bond type:

  • Contractor license bond: It is needed by almost every state and is an assurance that the contractor shall fulfill all the codes and laws
  • Mortgage broker bond: This type of bond is needed by most states for certain entities who shall be lending money for the mortgage. This bond ensures all the possible rules and compliance being followed with the state laws that will govern the mortgage lending
  • Auto dealer bond: It is needed in different states for those who shall sell the vehicle to the public. As the statutes vary in every state, this will ensure the buyer can get a clear title for the vehicle.
  • Hunting and fishing license bonds: It is not required in all states. But in certain states, it is needed for the retail seller. It ensures the license is given as per the laws that govern such retailers and also the retailer shall remit the money to the state.

Permit bonds Types include:

  • Encroachment permit bonds: It is needed to ensure the work is done within the state such as driveways, highways, and grading.
  • Right of Way bonds: This bond is needed by cities to ensure that if there is any damage, it will be repaired and all the laws shall be followed.
  • Special Event Permit bonds: this is not required by all the states. But it is given for the procession or parades of the city or state authorities for the races, tours, and banner placements too.


The purpose of license & permit bonds is to give assurance to the people that the vendor who is starting a particular business is reliable. The vendor has been validated and that is what such bond depicts. This type of bond is needed by the authorities of the state or the city along with the permission of the other work they have been doing. Another purpose of the bond is the assurance that the purchase of the bond shall follow all the laws and codes associated with the operation they shall be intending to do. It also guarantees that if there is any damage on the certain location where the business option is being carried, it shall be taken care of by them.

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