License and permit bonds are common types of surety bonds, which are financial instruments that protect consumers and governments by holding businesses accountable to federal, state, and local laws and regulations. Companies in various industries must obtain license and permit bonds before they can legally conduct business with customers.
A license is permission to do something. In some states, it's required to work as an insurance agent or auto mechanic. A permit is permission to do something in certain circumstances or at specific times or locations. For example, you might need a permit to use fireworks on July 4th or sell food at your church fundraiser.
License and permit bonds are used to guarantee the performance of an applicant for a license or permit from a government agency. The bond ensures that if the applicant fails to fulfill the terms of the contract or violates any laws or regulations governing their business activities, they will be financially responsible for any damages resulting from their actions. License and permit bonds are required to cover any costs associated with issuing a license or permit as well as any fees incurred due to noncompliance with state laws or regulations. For more information, please refer to the info graphic below.
