License & Permit Bond Types
Statutory
Ensures a business or individual complies with applicable laws, regulations, and licensing requirements in their field.
Common License & Permit – Public Safety
Protects the public against physical damage or bodily harm.
Non-Hazardous – Public Protection
Benefits the public against unfair practices, misrepresentation, and fraud.
Hazardous License & Permit – Financial Guarantee
Protects the public against some credit loss by guaranteeing the Principal will pay sums when they become due to the public agency.
License & Permit Bonds: Terminology
Cumulative Liability
The aggregate amount that an Obligee can recover under two or more bonds, filed in succession from the same Principal.
Aggregate Liability
Limits the surety’s liability to the bond penalty regardless of the number of claims made against the bond.
License & Permit Bonds: Rates
Presently companies are still using the standard Surety Association rates. However, companies may now file their own rates, subject to approval by the state.
Annual Earned Minimum
$50.00 or $100.00 on most bonds. Premiums are usually figured on a per one-thousand basis, with sliding scales in some cases.
Advance Payment of Premiums
Where annual premiums for a License or Permit Bond, written or to be written for the same principal in the same amount, are paid in advance for two years or more and the annual premium is $50.00 or more, a discount of 25% shall be allowed on premiums for second or subsequent years.
First Year and Renewal Premiums – Adjustments
The first year and renewal premiums for all bonds for which term premium is not applicable shall be adjusted pro rate upon termination subject to an Annual Earned Minimum of $50.00 or $100.00
License & Permit Bonds: Terms
The term or period covered by a license or permit bond corresponds to the term or period covered by the license or permit, but the right to file claims under any bond for losses sustained while the bond was in force, continues for varying periods, depending on the particular bond.
Example:
Common Expiration Date = Motor Vehicle Bonds expire at the end of the month in which dealer is originally licensed.
Year To Date = Liquor Bond, Outdoor Advertiser Bond
License & Permit Bonds: Renewals
Renewals that are processed by the surety in advance of the renewal date will consist of one of the following:
Renewal Bond
Normally, only one copy of the bond (the original) is mailed to the agent. The original bond is signed by the principal and then countersigned by the agent as Resident Agent. The bond is then filed with the Obligee.
Continuation Certificate
Most companies prefer to issue continuation certificates because it is easier to process. There are no signatures required, but the certificate is filed with the Obligee.
Invoice
Continuous bonds that do not need a renewal bond or a continuation certificate are renewed by invoice only. The invoice is not filed with anyone but is only for billing purposes.
Example: Probate & Fidelity bonds