License and Permit Bonds are a kind of surety bonds which are also sometimes known as commercial bonds or just as license bonds. No matter what the name, license, and permit bonds are issued by the government as a requirement for pre-licensing in many businesses. This bond ensures that every business which operates will have to follow the laws and the regulations of the local area, the state or the federal government. Every license bond is issued as specific to one industry and the customers of the industry as well as the state is protected under the bond from any damages that might be suffered by the industry. The license bonds would thereby, ensure that no business carries out any fraudulent activity which might harm their customers or the state. Any business operating in any industry has to be licensed before they can legally start their operation in the market.
Cost of a License and Permit Bond
The cost of license and permit bonds varies in different states and countries. However, each of the license bonds can only offer protection until a certain amount which is called the total bond amount. The total bond amount varies in different industries and businesses and the laws of the state. The premium or the amount that the bonded business has to pay to the license board also varies based on different factors. The main factor which decided the premium is the credit score of the entity. The higher the credit, the lesser the premium and the lesser the credit score, the higher the premium. The premium is calculated through a percentage of the total amount of the bond.
Different Types of License and Permit Bonds
License and Permit Bonds are of different types and the list is quite extensive. This is because the bonds are applied based on the different businesses in different industries. Some common types of license and permit bonds are mentioned below:
- Airline Reporting Bond: This bond is also known as the Airline Reporting Commission or ARC and ensures that any payments made to travel agents for booking of a particular airline would reach the said airline. If there is any failure in payment and the airline does not receive the payment then an ARC can be filed.
- Auto Dealer Bond: This bond protects the consumers from any fraudulent actions which can be committed by any auto dealership or even their employees. The auto dealership would have to purchase this surety bond which states that the dealership should follow all the regulations of the state before they can sell any motor vehicle to any individual.
- Health Club Bond: This bond ensures that in the case where a health club may go out of business, the consumers would be completely protected. The amount of the bond would be used to refund all the membership fees which are prepaid.
There are other kinds of license and permit bonds as well. The license bonds should be purchased by every business operating in any industry so that they can be a legal entity and the consumers associated with it are also protected in case of an issue.