License Bonds are a type of surety bond that provide financial protection for businesses and individuals who provide a certain product or service that is purchased by the public. Like any form of surety insurance, license bonds are purchased by the person or company who will be providing the product or service. They are put into place in order to provide financial compensation for the person or party purchasing the provided product or service.
Are License Bonds Required?
In most states, businesses and individuals who provide products and services are required by law and/or the commerce department to procure a license bond in order to conduct business. Keep in mind that the laws vary by state and municipality, so check with an attorney or the courts to find out what the exact laws regarding license bonds are in your city and state.
Who Needs License Bonds?
The commerce department can require bonds for businesses and individuals in many industries, including:
- Automotive Sales
- Private Detectives
- Interior and Exterior Remodeling
- Freight Brokers
- Insurance Brokers
The list can go on, and there are specific types of bonds that are unique to each industry. It’s best to consult with an attorney to see if your industry requires a specific bond.
Can’t I Just Get Insurance?
Although surety and commercial insurance seem similar, they are very different. Insurance protects your business from financial harm — different types of insurance include workers compensation, professional liability, employers liability, etc. — surety protects your customers from financial harm that may be caused by you. Many states require businesses to have insurance on top of obtaining a surety bond.
Check with commerce department about the specific requirements based on your municipality.
How You Can Obtain a License Bond?
The best way to obtain a license bond is to work with a qualified surety bond agency. At The Patrick J. Thomas agency, we specialize in procuring surety bonds for businesses across many industries, even those that operate in numerous states. For help obtaining a license bond or any commercial insurance for your business, contact us today.
Disclaimer: this is for informational purposes only and is not intended to be legal advice. If you need legal counsel, please contact an attorney directly.