California Property & Casualty Broker-AgentMiscellaneousHard
A municipality requires a construction company to provide a bond guaranteeing that all specified permits and regulations will be followed during a public works project. Which type of bond would fulfill this requirement?
- ASupply Bond
- BCourt Bond
- CLicense and Permit Bond
- DMaintenance Bond
Show answer & explanationAnswer & explanation
Correct answer: C. License and Permit Bond
License and Permit Bonds are required by governmental entities to ensure that individuals or businesses comply with relevant laws, regulations, and ordinances when performing licensed activities or obtaining permits, such as for construction projects.
Why the other options are wrong
- A. A Supply Bond guarantees that a supplier will deliver materials according to the contract terms.
- B. Court Bonds are required in judicial proceedings, such as probate or appeal bonds.
- D. A Maintenance Bond guarantees that a completed project will be free from defects for a specified period after completion.
License and Permit Bond
A type of surety bond required by governmental bodies to ensure that individuals or businesses comply with applicable laws, regulations, and ordinances when performing specific activities or operating under a license or permit.
- Guarantees compliance with legal requirements.
- Often required for contractors, electricians, plumbers, public works.
- Protects the public and the governmental entity from non-compliance.
Memory trick: Contractors, Fiduciaries, and Public Permits all need bonds.