Permit bonds are a specific type of surety bond that many industries require before an individual can get a certain type of business license. As shown below, there are many types of permit bonds.
Contractor license bonds
Car dealer bonds
Collection agent bonds
Money transmitter bonds
Freight broker bonds
Permit bonds protect consumers by guaranteeing that a business will follow the state’s regulations and rules. If a business fails in that regard, someone can file a claim against the Permit Bond in Arizona. Below are several important facts about permit bonds for business owners.
Permit Bonds Don’t Protect the Holder
Unlike insurance, which protects the policyholder, a permit bond does not protect the business. If a business owner wishes to protect themselves, they would need to purchase a fidelity bond. Permit bonds protect other people, and they are best thought of as insurance for others, paid by the policyholder. While nothing will happen if the business owner follows the law and fulfills his or her duties, if they fail to do so, someone can file a claim.
Bonds are Relatively Inexpensive
A Permit Bond in Arizona is typically set at a specific amount, and the bondholder does not need to pay the full amount to become bonded. In most cases, a bond can be bought for as little as one percent of the total amount. For instance, a $25,000 bond may only cost the business owner $250. The rate the business owner pays is based on his or her personal credit score. If they have good credit, they can expect to pay up to three percent of the total bond amount. Those with poor credit can expect to pay between four and 15% of the total bond amount.
Permit Bonds are Not Insurance
Many people confuse permit bonds with insurance, but they are not the same. When a business owner says that the company is licensed, bonded and insured, this signifies that they have all three types of coverage and that they’ve met all the state’s requirements. Browse our website to learn more about the permit bonding process.
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