License & Permit Bond

License and Permit bonds, sometimes called L&P or Business License bonds, are a class of surety bonds that individuals or businesses must purchase as a prerequisite to obtaining a professional or business license or permit. License and Permit bonds are most often required by a government agency and protect the public from financial harm if the license/permit holder violates the terms of their license. For example, if an auto dealer sells a car with a faulty odometer, then the customer could file a claim against the dealer’s bond to recover their losses.

Any surety bond that serves as a prerequisite to obtaining a license or permit is considered an L&P bond.

Unlike most insurance products, surety bonds protect a third party (the oblige) from acts that violate the law. When the surety company suffers a loss due to a license or permit holder’s actions, the license or permit holder must repay to the surety company any losses and sometimes court costs and other fees.