Surety bonds • License and permit bonds
License and Permit Bonds: What They Are, Who Needs One, and What They Cost
A license and permit bond is a surety bond that a government agency requires before it issues a business license or permit. The bond guarantees that the business will follow the laws and rules tied to that license, and it pays harmed customers or the agency if the business does not. Contractors, auto dealers, notaries, freight brokers, and mortgage brokers are among the businesses that commonly need one.
This guide explains how license and permit bonds work, what they cost, and links to our state-by-state bond guides. Blake Insurance Group is an independent agency, and a licensed agent can help you find the right bond.
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How license and permit bonds work
Every surety bond has three parties: the principal (your business), the obligee (the agency that requires the bond), and the surety (the company that issues it). If your business breaks the rules the bond guarantees, a harmed customer or the agency can file a claim, and the surety pays valid claims up to the bond amount. Unlike insurance, you must repay the surety for any claim it pays (Insureon, NFP).
License and permit bonds do not replace general liability, workers’ compensation, or professional liability insurance. “License bond” and “permit bond” are often used interchangeably (SuretyBonds.com). See our license bond vs. permit bond guide for the differences.
What license and permit bonds cost
Many license and permit bonds are issued instantly at about 1% of the bond amount, so a $10,000 bond often costs about $100 a year. Larger or higher-risk bonds are underwritten, and your credit score is the biggest pricing factor (SuretyBonds.com). Insureon reports that its customers pay an average of $8 a month for these bonds (Insureon).
| Bond | Required amount |
|---|---|
| Freight broker (BMC-84) | $75,000 |
| California contractor license | $25,000 |
| Iowa out-of-state contractor registration | $25,000 |
| North Carolina landscape contractor | $10,000 |
| Oklahoma mechanical contractor | $5,000 |
Sources: SuretyBonds.com, CSLB, Iowa DIAL, N.C. Gen. Stat. Chapter 89D, Okla. Admin. Code 158:50-5-3. See our surety bond cost guide or the surety bond cost calculator.
Contractor license bonds
Many states and cities require contractors to post a bond to get or keep a license. Choose your bond:
- Alabama roofer bond
- Arizona contractor license bond
- California contractor license bond
- Columbus, Ohio contractor license bond
- Iowa contractor bond
- New Mexico contractor license bond
- NYC home improvement contractor bond
- Oklahoma contractor license bond
- South Carolina contractor license bond
- Tennessee home improvement bond
- Virginia contractor license bond
- Washington contractor bond
- West Virginia contractor bond
Auto dealer bonds
Almost every state requires new and used auto dealers to be bonded to protect customers from fraud (SuretyBonds.com). Choose your state:
- Alabama auto dealer bond
- Arizona auto dealer bond
- California auto dealer bond
- Florida auto dealer bond
- Georgia auto dealer bond
- Illinois auto dealer bond
- Iowa auto dealer bond
- Kansas auto dealer bond
- Michigan auto dealer bond
- Nebraska auto dealer bond
- New Jersey auto dealer bond
- New Mexico auto dealer bond
- New York auto dealer bond
- North Carolina auto dealer bond
- Ohio auto dealer bond
- Oklahoma auto dealer bond
- Pennsylvania auto dealer bond
- South Carolina auto dealer bond
- South Dakota auto dealer bond
- Tennessee auto dealer bond
- Texas auto dealer bond
- Virginia auto dealer bond
- Washington auto dealer bond
- West Virginia auto dealer bond
Notary bonds
Many states require notaries to post a bond that protects the public from notary misconduct. Choose your state:
Other license bonds
How to get a license or permit bond
- Confirm the exact bond type, amount, and obligee with the agency that issues your license or permit.
- Request a quote with your business details and, for underwritten bonds, a credit check.
- Pay the premium, sign the bond, and file it with the agency, often with an original signature or electronic filing.
- Renew the bond on time, because a lapse can suspend your license.
You can also buy a surety bond online or browse our surety bonds guides by state.
License and permit bond FAQs
What is a license and permit bond?
A surety bond required by a government agency before it issues a business license or permit. It guarantees the business will follow the laws tied to that license.
How much does a license and permit bond cost?
Many are issued at about 1% of the bond amount, so a $10,000 bond often costs about $100. Underwritten bonds are priced mainly on credit.
Who does a license bond protect?
Customers and the government agency that requires it, not the business that buys it. The business must repay the surety for any claim it pays.
Is a license bond the same as insurance?
No. A bond guarantees your compliance and you repay any claims, while insurance protects your business from covered losses.
Related guides
Important information
Compensation. The link in the partner quote box near the top of this page is sponsored, and Blake Insurance Group may be paid if you make a purchase. Sponsored placement does not affect the other information on this page.
Independent agency. Blake Insurance Group LLC is an independent insurance agency. Licensed insurance producer NPN 16944666. Licensed states: AZ, AL, TX, CA, NY, OH, FL, NC, VA, GA, OK, NM, IA, KS, MI, NE, SC, SD, WV, IL, NJ, PA, TN, and WA. Which insurance companies we can quote depends on our current appointments, the product, and your state. Mentioning a company on this page does not mean we represent it.
Cost figures. Published averages and ranges are cited from the sources named, as of the dates shown. They are not quotes and may not reflect your price, which depends on the insurer, the surety, your credit, the bond type, and underwriting.
Availability. Coverage, prices, discounts, and eligibility vary by insurer, state, and applicant, and are subject to underwriting. The issued policy controls.
Your next step
Tell us the bond you need, and a licensed agent will help you get bonded, or start a bond quote online through our partner.
