A license bond, or permit bond in Arizona, is a special commercial bond that businesses in certain sectors must have to gain licensing. Not only do these bonds protect customers by ensuring the company’s compliance with state and federal law, they act as a guarantee from an insurer that the company will operate under all mandatory safety and building codes. Those needing a permit bond should consider the following facts in determining their purpose.
Permit Bonds Involve Three Parties
When a business files a permit bond, it involves three parties: the business, the customer, and the bond provider. Customers pay businesses to do a certain job, and the bond guarantees the work will be done in accordance with regulations. If the company fails in any aspect, the insurer pays the customer for the work not completed.
License Bonds are Required in Many Sectors
Contractors in most areas must have permit bonds, as must companies that sell hunting and fishing licenses. Depending on the area, other businesses such as auctioneers, auto dealers, gyms, payday loan companies, and travel agencies may need license bonds.
Permit and License Bonds are Not an Insurance Contract
Many confuse a Permit Bond in Arizona with an insurance contract, but the two documents protect different parties. License bonds protect customers while insurance contracts protect companies and contractors.
There are Penalties for Operating Without a Permit Bond
In most cases, businesses can’t get by without a permit bond. A company operating without the proper licensing can face civil and criminal liabilities. Depending on the area, a business may not need a license. However, if a company fails to follow federal and state law, the owner could face high fines and possible jail time.
Credit History Isn’t a Factor in Getting a Permit Bond
Past financial issues cannot prevent a business owner from getting a license bond. While good credit makes the process easier, other factors such as pending litigation, bankruptcies, and previous bonds are considered. While getting a bond can be costly, it is much less expensive than going without a license. Visit website for help in getting the necessary bonds for any type of business.
