What is the primary purpose of a license bond?

The primary purpose of a license bond is to ensure that businesses comply with local regulations and laws. License bonds are often required by governmental entities as a condition for obtaining a business license. They serve as a form of protection for the public by guaranteeing that the licensed business will conduct its operations in accordance with established rules and regulations. If the business fails to adhere to these laws, the bond can provide a source of compensation for any damages or losses incurred as a result of the business's misconduct.

Although other options touch on important aspects of bonding, the specific focus of a license bond is regulatory compliance rather than guaranteeing payment to subcontractors, protecting the public in a broad sense, or guaranteeing the completion of a project.