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License Bonds

Many types of individuals and businesses require licenses to operate per state or federal requirements. In fact, 30% of all professionals need licenses. Frequently, the state or federal entity will also require a License Bond to go along with the license (or as a requirement of holding the license). Licensees are required to maintain their license and their surety bond from year to year by the state. If the licensee fails to uphold the terms of his license, he or she may lose such license and face a possible claim or claims on their License Bond.

A License Bond is also more generically called a surety bond. The term "Surety Bond" is used to describe many different types of Bonds including License Bonds. License Bonds are three party agreements. The parties are:

  • Principal, or Licensee - primary person or entity who will be performing a contractual obligation per his or her license.
  • Obligee - party who is the recipient of the obligation.
  • Surety - ensures (guarantees) that the principal's obligations will be performed. Sureties are similar to (sometimes divisions of) insurance companies.

Via this agreement, the Surety agrees to uphold, for the benefit of the obligee, the contractual obligations of the licensed Principal, if that Principal fails to demonstrate its obligations under their license to the obligee. A License Bond is provided to induce the state (obligee) to license the Principal. For example, it demonstrates the credibility of the license applicant.

The license applicant will pay a pre-determined premium, which is paid annually in exchange for the Surety's financial assurance extension of its Surety credit. If a claim is filed on the License Bond, the Surety will generally investigate it in detail prior to payment of any such claim. If it is determined to be a legitimate claim, the Surety will pay the claim as required. The Surety will then require the principal to reimburse them in the amount paid as well as legal fees incurred in the process.

Do You Need a License Bond?

If you need a professional license to work legally you will likely need a surety bond as well. That being said, some licenses don't have a bond requirement. There are also some states that require bonds when other states do not. The best source of information is whatever state, county, city, or municipal agency is responsible for issuing professional licenses in your industry. You can also contact Viking Bond Service to get updated information about a wide range of license surety bond requirements in every state.

How Much Do License Bonds Cost?

It depends on many factors. Principals are required to obtain license bonds that cover a minimum amount of compensation, but the minimum varies widely across professions and states. For example, a tire hauler in Mississippi is required to get a $10,000 bond compared to a new car dealer in New York who needs a $50,000 bond. The actual cost of the bond is typically around 1% - 3% of the actual bond amount – e.g. the $50,000 new car bond costs about $1,500 in annual premiums. The percentage you pay depends on the information in your bond application. Underwriters will evaluate your financial history and credit risk to determine how likely you are to pay the surety company back for any valid claims filed against the surety bond. Good credit scores lead to lower premiums, but applicants with poor credit aren't necessarily denied, they just pay a little more. Viking Bond Service has become an industry leader by finding cost-effective bond options for the majority of applicants.

Does a License Surety Bond Need to Be Renewed?

Most bonds need to be renewed after one year. When you renew you need to supply updated financial information that underwriters will use to recalculate your risk and reassess your premium – meaning the cost could go up or down. If you do not renew your bond, you won't be able to renew your professional license, so be sure to budget for the renewal fees. Viking Bond Service makes it easy to keep track of your renewal date by sending you a series of notifications in advance.

What is a License Surety Bond Application Like?

Since having a bond is a prerequisite for getting a license, you shouldn't wait to apply. Viking Bond Service helps you get bond quotes faster by expediting the application process. Here's what you will need to supply to get things started:

  • Background information about yourself and anyone else who owns 10% or more of the business.
  • Answers to questions about your business's financial health and history.
  • Any additional information that may be requested by the surety company.

It may only take you a few minutes to complete the bond application, and you will receive a quote back usually within 24 hours of completing the application. After you pay the premiums, Viking Bond Service will help you provide official proof of your surety bond to the agency that requires it.

License Bonds at Viking Bond Service, Inc.

Viking Bond Service is a national Surety Agency. We have been handling all types and amounts of License Bonds since our inception. Viking Bond Service's team of professionals has over one hundred years of combined experience in the license and surety bond industry. We provide License Bonding through all major Surety companies in the U.S. and use A-Rated, and Treasury Listed Surety paper. Viking Bond Service offers approvals for nearly all the License Bond requests presented. We are able to quote most clients who would not qualify for standard License Bond markets due to credit or financial issue. Viking Bond Service's aim is providing our clients with friendly, honest, and efficient service.

Whether you are a first time License Bond applicant or a license holder who is looking to expand into additional states, Viking Bond Service can assist you with your License Bond needs. We have serviced License Bonds in all states and are familiar with the forms, amounts and requirements. Check with a Viking Bond Service representative for more information on License Bonding.

Request a License Bond Quote:

You can contact us by calling 1-(888) 2-SURETY (1-888 278-7389) or by completing an Online Application. You can also choose to fill out and submit the contact form on the page and one of our agents will contact you shortly.

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