What Are the Differences Between License & Permit and Fidelity Bonds?

Sheila from Ohio asks, “What is the difference between a license & permit bond and a fidelity bond?”

Sheila, 

Thanks for the great question.  The best way to answer your question is to describe what both types of bonds are.

The most common type of bond is a license and permit bond--sometimes referred to as a commercial surety bond.  This type of bond is usually required by a city, county, or state government, and required to obtain or maintain a license or permit-- thus the name license and permit bond.  A few types of industries that are likely to require a license and permit bond include:

• Used car dealers
• Pawnbrokers
• Public adjusters
• General contractors
• Specialty contractors  

A fidelity bond is a form of insurance that helps to protect an employer from loss due to negligence or dishonesty.  A fidelity bond is written in either first-party or third-party.  First-party fidelity bonds protect businesses from dishonesty and/or negligence that may be committed by direct employees of that business. Third-party fidelity bonds protect businesses from dishonestly and/or negligence by people working for the business on a contract basis.  A few examples where a first-party fidelity bond may be required are:

• An employee with a checkered past.  
• Notary
• Public Official

Examples of businesses that may require a third-party fidelity bond include:

• Security firms
• Janitorial services
• Consultants 

The main purpose of both license and permit bonds and fidelity bonds is to give an extra layer of protection for the entity requiring them, whether it be a governing body or a business.  At the Ashton Agency, we specialize in both license and permit bonds and fidelity bonds.  Visit our website http://ashtonagency.com to see all our bond and insurance programs!

Are you an auto dealer, public adjuster, contractor or another profession looking to renew your surety bond? Ashton Agency has been building relationships nationwide for over 45 years at the best rates! Call us today at (800) 451-4854 (East Coast) or (800) 452-2663 (West Coast) to speak with one of our helpful customer service representatives (hablamos español)!