Understanding The Need And Purpose Of License And Permit Surety Bonds

License And Permit Surety Bonds

As someone, who resides in Canada, you may very well know all about surety bonds. However, the majority of individuals do not. In fact, most people believe that bonds are investment products and nothing more. The truth of the matter is that surety bonds are unique and they have nothing to do with investing. This is definitely true, when it comes to license and permit bonds. Within this comprehensive guide, you’ll learn more about these bonds and their purposes.

What Are Permit And License Bonds?

Before learning more, it is best to get a grasp of the basics. What precisely are permit and license bonds? These are bonds, which govern businesses and professionals. Generally, the bond is a necessity and must be obtained, before the professional will be able to obtain their licensure. Of course, it is essential to remember that there is an abundance of different license bonds and none are identical to one another. For instance, there is a General Contractor’s bond, Plumber’s bond, and an Electrician’s bond.

The Principal’s Commitment

If you’re an electrician, who wants to obtain their license, you’ll most likely need to obtain the associated bond first. Initially, this might seem like a simplistic task, which requires very little thought. The truth of the matter is that obtaining a bond will require you to make a big commitment. Once you’ve acquired the bond, you are making a guarantee to your local province and the federal Canadian government that you’ll abide by the codes and regulations, which govern your profession. Failing to live up to your commitment could result in devastating repercussions.

Public Protection

Consumers are always going to be at risk of fraud, physical harm, and property damage, when they hire a public service provider. The Canadian government has taken the necessary steps to protect the consumer from these risks, by enforcing companies to post a license surety bond, before they can apply for their business license. While, it is nearly impossible for the government to monitor each and every company that operates within the Canadian borders, the surety license bond aids in making this possible.

The license and permit surety bond protects consumers, in the event that a company exhibits unlawful or negligent behavior.

What Happens If A Company Fails To Comply With The Terms Of The License Surety Bond?

While, most companies strive to provide the public with superior service, nothing can be for certain. A minor accident can turn into a major catastrophe for a licensed company or contractor, especially if the client files a claim on the surety bond. When this happens, the company is going to be at a huge risk of having their surety bond and license revoked. It is a fact, that surety companies are forced to investigate thousands of claims every year. More times than not, the surety will find in the favor of the client. The full amount of the bond will be paid out to the claimant and the principal will be forced to repay the surety.

Different Types Of License And Permit Bonds

As mentioned above, there are numerous types of license and permit bonds. Although they work in a similar fashion, they govern different professions or activities. Below, you’ll find a breakdown of some of the different types.

  • Electrician’s Bond – Electricians have an abundance of responsibilities. If they make a mistake, the client’s home could catch on fire and potentially burn to the ground! In order to prevent them from happening and to better protect the consumer, the electrician will need to acquire the bond and license, before they’ll be able to perform their service.
  • Plumber’s Bond – A plumber is another individual, who will need to acquire a bond. Again, a plumbing problem could result in major damages to the client’s home. By forcing these individuals to acquire bonds and encouraging them to follow the province’s regulations, the potential for problems will be greatly decreased.
  • Driveway Bond – Usually, professionals that work on driveways will be required to buy bonds. Those that intend to erect, construct, alter, or repair driveways in the country of Canada will need to get one of these bonds. The bond amount will depend on the province where you operate.

Truly, the list could go on and on. There are numerous types of license and permit bonds. Before offering your services to the public, it is a good idea to do a little research and see whether or not you need to do so.

How To Acquire A Surety Bond Within The Country Of Canada

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How to get a Surety Bond

There are many Canadians, who will proceed through their entire lives, without ever needing to obtain a surety bond. Others will be required to obtain a bond every year. Initially, the concept of the surety bond can be overwhelming and the thought could very well give you a fright. This is truly a misconception. The truth of the matter is that obtaining surety products has gotten much easier over the years and it is now possible to submit your application online. Within this guide, you’ll learn all about obtaining a surety bond.

Identify Your Needs

One thing that many people fail to realize is that surety bonds are enormous and very diverse. The term surety bond is often thrown around to cover a wide array of different products. When one person determines that they need a surety bond, they need to understand that the specific bond needed will vary from that of the next person. So, before you can move ahead, you need to identify your specific needs. This may require referring to the laws within your specific province, as well as the Canadian federal laws.

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Figure Out The Amount

After you’ve identified the specific type of bond needed, you’ll next need to consider the bond amount. The bond amount will vary incredibly and will be determining by a number of different parameters. First, you should consider the bond type. Some bonds are cheaper than others. Secondly, your province will play a major role in figuring out the precise cost. If you’re trying to acquire a court bond, the judge will generally set the amount. Once you’ve figured out this amount, you might be astonished by the quantity. Don’t be! This is where the surety provider will enter the picture.

Obtaining Documents

Depending on the specific type of bond that you need, you may need a handful of documents to get the bond. Although the specifics will depend on the bond type, some of the most commonly needed documents will be listed below.

  • Annual financial statement
  • Liquid asset information
  • Net worth and finances
  • Continuity plan
  • Business plan
  • Work on hand

Again, not all of these documents are always necessary.

Getting Quotes

Now, it is time to get down to work. Once you’ve acquired the information above, you’ll know precisely what is needed. You should begin visiting the websites of Canadian surety providers. The mass majority of these groups will offer an online application or quote form. It is highly pertinent that you take advantage of this offering. By obtaining and comparing quotes from numerous groups, you will eventually be able to pinpoint the best price for your specific situation.

Remember that your personal credit score will play a major role in your final price figure. A handful of other factors, such as business history and finances, may also be impactful.

Agreement And Payment

After you’ve completed the steps above and have found a good price, a surety provider like SuretyKings will present you a bond agreement. Be sure to carefully read through the paperwork, before signing at the bottom. An attorney may be needed, so you can avoid surprises and unfavorable terms. Once you’ve agreed to the terms, you will want to pay the fees and acquire your Surety Bond from SuretyKings.

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