License and Miscellaneous Bonds
Required by states, cities and other licensing authorities from holders of licenses to engage in certain businesses, or permits to exercise certain privileges.
Most of the smaller license bonds guarantee simply that the principal will conduct his business in accordance with the laws or ordinances regulating such business are very desirable.
The License and Permit Bond classification includes, however, some bonds that are required by laws imposing upon the licensee and his surety a liability greater than that of simple compliance with the law. Also, there may be certain hazards inherent in the particular business engaged in by the principal.
The liability under such bonds should be analyzed and the bond should be underwritten accordingly. Among license bonds of a hazardous nature are the following:
- Tax bonds that guarantee the payment of taxes (gasoline, cigarette, etc.); Commission merchants, livestock dealers, and similar bonds guaranteeing payment of moneys due for products sold or purchased;
- Warehouse bonds; Collection Agencies; Housemovers or Wreckers; Blasting or Storing Explosives; Oil and gas drilling bonds; Forfeiture bonds which are forfeited to the licensing authority upon violation of law; etc.
- A special bond form sometimes is required to support each type of license or permit.
This classification is a "catch-all" for bonds that do not fit into any of the main classes. Underwriting considerations vary too widely to make possible any blanket rules, however for most types the financial condition and credit record of the applicant is of primary importance in determining the acceptability of a particular bond.