Required by a municipality or other public body as a condition to granting a
license or permit to engage in a specified activity, this bond guarantees that
the party seeking the license or permit (the obligor) will comply with
applicable laws or regulations. These bonds can also be structured to provide
indemnity guarantees to third parties who sustain injury or damage as a result
of the obligor's activities as described in the license or permit when such
a guarantee is required. For example, businesses that hang signs over public
sidewalks may be required to provide indemnity guarantees for injuries to
pedestrians.