Surety Bonds

License Bonds Explained



It’s common for government agencies to require professionals from different fields to obtain a license bond as a requisite toward licensure. Read on for everything you need to know about license bonds, from the purpose they serve, to how they work, as well as how to obtain them—and the importance of license bond renewal too.


Obligees, Principals and Sureties

License bonds are a type of surety bond. Essentially, a license bond represents a commitment by a surety company to compensate for the failure of a licensed professional to fulfill obligations. License bonds, like all surety bonds, involve three parties:

A principal:  The professional who commits to fulfilling obligations.

An obligee:  The entity seeking a guarantee that the principal will perform responsibly.

A surety:       The issuer of the bond guaranteeing that the principal will fulfill obligations.


Examples of professionals frequently in need of license bonds are contractors, such as electricians or plumbers, notaries, automobile dealers, liquor sellers, travel agents, mortgage brokers—and more. As this brief video explains, when you secure a license bond, you are guaranteeing to the public that you will abide by all of the regulations applicable to your profession. If you fail to do so, a claim can be made against your bond—that’s how license bonds serve as a form of protection to the public. Simply put, license bonds are a commitment to run a business professionally, honestly and in accordance with the law. Value Penguin offers this summation:

At its simplest, a surety bond requires the surety to pay a set amount of money to the obligee if a principal fails to perform a contractual obligation. Obligees are frequently government agencies, but commercial and professional parties can also use surety bonds…To obtain a surety bond, the principal pays a premium to the surety… The surety bond requires the principal to sign an indemnity agreement that pledges company and personal assets to reimburse the surety if a claim occurs. If these assets are insufficient or uncollectible, the surety pays its own money to satisfy the claim.

Obligee Requirements

Whenever a government office or other entity requires a license bond, specific requirements for the bond are detailed. For example, a notary bond in one state likely has different requirements then a notary bond in another state. Varying requirements  make it advisable to obtain license bonds from a direct writer who can address the specific requirements of the obligee. Generic bonds, obtained through middle players, are not always sufficient—and are more likely to involve layers of fees and cause timing delays for professionals on the path to licensure.


In business since 1930, Colonial Surety is a direct bond writer with a digital portfolio of 4,000 license and permit bonds, making it efficient, affordable and speedy for professionals in every state to obtain their required bonds. From mortgage broker, to real estate agent, to motor vehicle dealer, collection agent and more—we provide the license and permit bonds professionals need to be licensed for business. The steps to obtaining a bond at Colonial are simple: get a quote online, fill out the information, and enter a payment method. Then, simply print or e-file your bond—it’s that simple.


License and Permit Bonds Here Today.


Understanding License Bond Renewal

When bonds are a requirement for licensure—renewing them is not a choice—it’s an obligation. Professionals required to secure license bonds as a condition of state licensure must carefully adhere to bond renewal dates. The consequences of failing to maintain a current bond include lapse in state licensure, gaps in coverage for claims made against the bond and the delays and fees associated with beginning all over again with a new bond.

Conveniently, at Colonial Surety, license bonds can be efficiently renewed before the term ends, enabling professionals to maintain licensure and avoid the consequences and fees associated with expired bonds. Our user friendly online license bond service, makes it quick and easy to obtain thousands of license and permit bonds—and  our knowledgeable customer service team is at the ready too.

License and Permit Bond Portfolio Here.

Nationally Trusted Surety

As a national surety bond leader, Colonial makes it quick and efficient to obtain license bonds in just a few clicks, online, anytime, from anywhere. Founded in 1930, Colonial Surety Company is a leading direct seller and writer of surety bonds and insurance products across the USA. Colonial is rated “A Excellent” by A.M. Best Company and U.S. Treasury listed. Our customers have awarded us a 4.8 TrustScore—and they especially appreciate our speedy, easy service. You will too—we promise!