In certain types of business dealings, a license bond in Arizona is a necessity before any actual work can be done. However, there are a host of questions about them, especially if someone has never had to acquire one. Here are answers to some of the most frequently asked questions about license bonds.
Q: What exactly is meant by a license bond?
A: A license bond is essentially a required surety bond required by some agencies of the government before a specific license is issued. It involves a minimum of three parties. The parties include:
1. A primary party who is under contractual obligation to perform. This party is known as the principal.
2. The agency that requires the bond is known as the entity.
3. The company that is ensuring the principal is performing the contracted duties known as the surety.
Thus, the surety is simply a form of insurance that the contract between the principal and the entity will be lived up to.
Q: What is the cost of a license bond?
A: The cost of a bond can vary from state to state. Other factors determining the cost of a bond can include the type of business license, the credit history of the principal, and the experience of the principal.
Q: Why is credit history a factor in getting a license bond in Arizona?
A: If a claim is made against the bond, the surety company wants to know the repayment ability and financial history of the principal. This is because the surety is backing the principal as a professionally licensed company or person.
Q: Why are surety bonds needed?
A: They are a form of consumer protection, especially in the instance of government agencies requiring one for a professional license to be maintained.
Browse our website for more information when someone feels that a license bond is needed. An experienced staff member can answer any questions that may be had and ensure that the bond being sought is the proper one for the current needs of that person. The business depends upon it, so why not go with a true professional?