Both permit and license bonds are special types of surety bond. Individuals starting businesses are required to have them before they are given their businesses licenses. A permit bond is meant to protect the end users or the consumers by ensuring that every business is abiding by all the regulations and rules.
Consumers are supposed to make claims when certain businesses fail to abide by certain regulations and rules. Such claims are made against the business permit and license bond. Main types of permit and license bonds include the following:
- Freight Broker Bonds- deals with freight brokers
- Motor vehicles Dealer Bonds- meant for the car dealers
- Contractor license bond- deals with general, main and subcontractors
- Notary Bonds-meant for the notary public
- Money Transmitter Bond- this is for money transmitters
The following are the main facts that you need to know about these bonds:
Permit and license bonds don’t protect you
These bonds are not meant for protecting businesses. Instead, they protect other individuals. They are different from insurances that protect the insured persons and their businesses. In fact, this is like insurance for other people that have been paid by you. Nothing happens with your bonds if you happen to follow the law and fulfill all your duties. Your bond will only be claimed by other people whenever you break the law or fail to fulfill certain duties. People who break these laws are forced to pay every coin of that claim. Individuals who want to protect their premises should go for fidelity bonds.
No fortune is incurred on permit and license bonds
They have a specified bond amount. Individuals do not have to pay the full amount for them to get bonded. For instance, if you are required to get a bond of $ 20,000 for your profession, then you will only be required to pay a certain percentage or fraction of that amount instead of paying the entire amount. It might only cost you about $ 200. The rate paid depends on the credit score of a person.
Businesses cannot operate without them
Anyone having a legitimate business is required to pay for this service. Otherwise, you might end up facing financial and criminal charges for operating illegally. Licensing is a must in any business. In some states, you can face a fine of up to $15,000 or a jail term of six months. Abiding by all the federal regulations and state regulations is highly recommended.