Contractor License or Permit Bond: A contract license or permit bond involves three different parties: the obligee, the principal, and the surety. It is a promise that the surety makes to pay the obligee in case the principal fails to fulfill their statutory requirements. These bonds are typically required by cities, states, and municipalities.
Contractor License & Permit Bonds are required by individual municipalities throughout Michigan and around the country in order for construction work to be permitted. State licensing boards, and local municipalities all routinely require contractors to file a bond of one type or another to guarantee specific work done.
WHAT IS A CONTRACTOR LICENSE BOND & PERMIT?
To obtain licensure or a permit, contractors need to get a license or permit bond from a surety bond company. The three parties involved are the Contractor (principal), the City, State or Municipality (obligee), and the Insurance Carrier (surety). The contractor license & permit bond not only benefits the contractor by allowing them to perform work within that jurisdiction; it helps others who could be involved or affected by unethical and costly business decisions. The bond ensures that the principal contractor will provide services in accordance with the Statute or Ordinance’s laws of the city and state or municipality, such as adhering to building codes.
If the contractor fails to fulfill the terms of the Statute or Ordinance within the jurisdiction the bond would pay damages caused/ sought by the affected party through the Obligee (City, State or Municipality). However, the surety will not simply absorb the loss. If a claim is made against the bond, the principal must reimburse the surety for any money they paid out when settling it. To get rates for a Contractor Bond, contact us today!
BONDS ARE ALL WE DO!