Surety Bonds / License & Permit Bonds
As an independent contractor or builder, you're likely well versed in the world of surety bonds, especially License and Permit Bonds. License and Permit Bonds are typically required by a township or state to ensure the services expected of you are completed according to regulation.
Contractors: What You Need to Know about License Bonds/Permit Bonds
For construction and contracting businesses, License and Permit Bonds are required by certain federal, state, or municipal governments as prerequisites to receive a license or permit to engage in certain business activities. These bonds function as a guarantee from a surety (usually an insurance company) to a government and its constituents that your carpentry business will comply with an underlying state and local laws relating to your industry, such as building codes and safety regulations.
For example, if your carpentry business won a bid to build the framework for a new school, usually you would buy the surety bond that would pay the school if you failed to complete your end of the contract or your performance was not up to code. The school could then use the money to pay another builder or contractor to do the job. Meanwhile, the insurance company paying the money would hold you responsible for reimbursement.
Contractors: What You Need to Know about License Bonds/Permit Bonds
For construction and contracting businesses, License and Permit Bonds are required by certain federal, state, or municipal governments as prerequisites to receive a license or permit to engage in certain business activities. These bonds function as a guarantee from a surety (usually an insurance company) to a government and its constituents that your carpentry business will comply with an underlying state and local laws relating to your industry, such as building codes and safety regulations.
For example, if your carpentry business won a bid to build the framework for a new school, usually you would buy the surety bond that would pay the school if you failed to complete your end of the contract or your performance was not up to code. The school could then use the money to pay another builder or contractor to do the job. Meanwhile, the insurance company paying the money would hold you responsible for reimbursement.
Key Details About License Bonds/Permit Bonds for Contractors
License Bonds or Permit Bonds always involve 3 parties:
A License Bond /Permit Bond differs from most small business insurance contracts because it involves three parties instead of just two — the insurer and the insured. For builders and contractors, the primary difference between a bond and a typical insurance contract is that the surety's duty is to the obligee, rather than you, even when you pay for the bond. Contact a Buckner agent today, and one of our licensed agents will help you find a License Bond / Permit Bond that meets your contract needs. |
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