Some business licenses require the posting of a bond. A bond is an insurance policy providing protection for customers and the municipality in the event the license holder does not fulfill all legal obligations. Generally, you obtain a bond through an insurance company. An occupational license is a state-mandated license that assures the state you are competent to perform your profession. Industries that require occupational licenses include contractors, lawyers, doctors, teachers and restaurant owners.
A bond is a set amount of money placed aside in a non-interest bearing account that can be used to pay any company liabilities. Amounts of bonds will typically be determined by the type of business you are licensing and the amount of liability that your company may encounter.
Insurance companies offer bonds for businesses, sometimes referred to as business liability insurance. As with other forms of insurance, your company will be evaluated by the insurance company and the monthly payment determined. If you are unsure of who to contact for a bond, try calling your insurance agent. Word of mouth recommendations are usually the most reliable sources. In general, industries that have direct contact with the public or specialized training will require an occupational bond. For example, builders must post a bond in the event that the building they built is later determined to be defective.
Bonds are also typically required for industries where the business owner will not have very much capital invested in the business. For example, welders must post a bond before most states will grant them a welding license. This requirement ensures that if someone is injured or property is damaged by a mistake the welder makes, the injured party can still collect the money necessary to pay them.
If you require more information about obtaining a bond for your occupational licensing, it is in your best interest to consult with a business attorney in your area.