Being Bonded and Insured Helps Complete Projects
If you run a company in the construction industry or have responsibility for a municipality, chances are you want to get your projects completed quickly and efficiently, with as few hiccups as possible. Being fully bonded and insured will help you with this.
Know little about bonding and insuring, or how it can help you get your projects done? Read on to find out all you need to know:
What’s the Difference Between Being Insured and Being Bonded?
A company that is licensed, bonded, and insured is a business that has all the correct licenses required for them to operate, as well as the correct business insurances required to work legally. In addition, it also means that they have paid for another layer of coverage with a bond.
What’s a Bond?
Basically, it’s an extra level of insurance added to your coverage plan. It will guarantee to pay out a specified amount if specific conditions are, or are not, met in the work contract you’ve committed to.
One example of this would be if you were a contractor with a general liability insurance policy. This will protect you against all the usual incidents like trips, slips, falls and machinery based injuries, but it won’t help you pay for extra liabilities such as claims against work that has not been completed to a high enough standard or even completed at all.
Bonds also cover various other things that normal insurance policies don’t cover, ensuring you can get on with the job without fear of losing everything in a lawsuit.
Are There Different Types of Bonds?
Yes, if you’re thinking about being bonded and insured, it’s important to know that there are several kinds of bonds you can use to help complete projects. They include:
Surety Bonds
Surety bonds are contracts drawn up between a minimum of three parties. They are used to protect against any losses caused by one of those three parties not living up to their contractual obligations. So, if you’re a contractor, you would have a bond with your customer and the surety (the organization or individual issuing the bond). If you cannot meet your contractual obligations, the surety will pay your customer the agreed sum.
License and Permit Bonds
License and permit bonds are bonds that are sometimes required by government agencies at all levels. These kinds of bonds can be valid for between one and five years and guarantee the government agency that your company will adhere to all regulations in order to protect the agency and its consumers.
Contract Bonds
Or performance bonds, as they are sometimes known, are a contract bond that guarantees the fulfillment of a company’s contractual terms. They were set up to assure the customer that they would get a certain standard of performance from the commercial contractors they used.
Each party in this kind of bond can specify the materials that will be used for the project, how long the project will take (including a fixed completion date), and any other factors that they feel are important.
These kinds of bonds are normally issued by insurance companies or banks and are typically purchased by contractors in order to secure a particular project. It’s a great way to ensure that customers are protected from a wide range of things, including contractor bankruptcy.
What Are the Benefits of Being Bonded and Insured?
As you can see above, being bonded and insured differs from simply being insured. Insurance policies tend to focus on the contracting company, ensuring that they are covered against litigation, whereas bonds, although they can certainly help to protect contractors, are typically far more focused on the customers.
They give clients various insurances that their work will be completed to a high standard and that, should anything go wrong, they will not lose out financially, and may in fact be compensated.
This makes many more clients far more inclined to hire a particular contractor or commercial contracting company. It’s a fast way to make everyone feel comfortable about the job.
How Much Does It Cost to Get Bonded and Insured?
As you might imagine, the cost of getting bonded and insured can vary significantly depending on a number of factors, including which profession you work in, how much coverage you need, which state you’re operating in, and what type of bond you require.
Often, bonds are paid in premiums, but sometimes you will need to pay a small percentage of the coverage sum amount to secure your bond. So, if, for example, you required a $100,000 bond, they may require you to pay a starting price of $1000.
Surety bonds typically cost more, with 15 percent of the project coverage sum being the average annual premium cost.
Does My Company Really Need to Be Bonded?
Most companies can get by with a standard insurance package, and unless they want to be bonded and insured, there is no actual need to do so.
However, companies and individuals working in the construction industry are far more likely to be bonded and insured. This is not only because it’s often a legal requirement, along with the basics like general liability insurance and worker’s comp, but also because it gives customers confidence and speeds the process up.
Of course, if you’re simply mowing lawns and mending cracks, rather than building houses, you may not need to be bonded at all, so always check with a knowledgeable insurer or legal professional before buying a bond.
Keller Insurance Services Offers Bonds
Want to get bonded and insured, while ensuring that you get the right level of coverage for your needs? Whether you’re a municipality looking to protect your interests or a contractor looking to speed up a job, contact Keller Insurance Services today.