The issuer of the license surety bond has a business model of offering surety financial services to principal parties which have undergone a background credit check. License bond applicants pay some level of premium for the services on a regular basis. Customer claims are investigated by the surety bond issuer to determine the validity of the claim. Valid claims are paid to the customer by the issuer of the bond. The bond issuer is responsible to recover its costs and legal expenses from the principle party client in default.
Bonds like Warehouseman Surety Bonds and regular surety bonds have advantages to the customer and the principle party. The customer has a contract defining expectations with a secured bond. The customer and principle party have a defined means of handling claims and disputes equitably. The surety bond instrument offers the principle party some advantages in assets management.