If you are getting into a contracting business, then it would be very advantageous for you to review, brush up on, or learn all that you can about being bonded and insured before you get the business ball rolling. Your company “egg” can literally be shattered and laid to waste before it even hatches securely, if you do not understand the key elements behind this vital market subject matter. Please take the time and read through all of this information to attain a sharper insight into why licensed contractors should be bonded and insured.
The first question that many might ask ought to pertain to what it means to be bonded and insured. Bonding insurance is often just called “bonding” and is a very valuable asset for a company. In times when dishonest and fraudulent behavior are present or when losses come about because of an absence of expertise or carelessness, then those who are bonded have a financial safety net to fall upon. Specifically, bonding insurance is made available in order to cover particular jobs in the event that it was not carried out to the customer’s gratification. Some very ideal professions that require bonding insurance would be security contractors, cleaning services, janitors and businesses involved with government contracts because of the possible unexpected monetary losing “risks” might be involved. Associates of a business may get bonded for monetary protection for instances where they may be robbed. This will ensure that the victimized company can be adequately reimbursed. However, the legal implications of the bonding will not cover this type of situation if that same business associate were not on the company property when the money was forcibly taken away from them. Often, it is the case where more than one employee is bonded and insured as a form of backup, should someone on the workforce be injured, on a vacation, seriously ill or no longer remaining on as part of the company.
Just being insured is defined by the specified losses that it protects and typically only includes contractors and workers. An illustration of this could be when a cleaning crew is sent in to maintain an art gallery and in the process, one of the exhibit pieces gets damaged. The cleaner(s) responsible for the harm done may lose working hours until the damages are paid for by the employer and so insurance would cover the working hours that are lost. For a company who is categorized as being “bonded and insured” they will have full financial coverage to protect them against such occurrences.
After understanding what the definition of bonded and insured implies, a contractor may next want to know about working without being bonded. The best way to find out if having bonding insurance is mandatory would be to do some personal investigating into the requirements of the State they are in. Various businesses are indeed required to invest in selected “surety” bonds at lawful quantities of insurance for liability. If one is so inclined then they can obtain a list from the secretary of state that will include insurance features and bonds that their business may need to have. Despite what a contractor can afford or even want to spend on insurance, it would definitely be in the best interests for everyone if minimal insurance was purchased even if it is not required by law.
After identifying whether or not insurance is mandatory for your business, find out how to go about getting bonded and insured. For bonding which will cover your employees, you should collect the necessary data about your business and your workforce. Some of this will consist of ID numbers from the different governments, business address, Social Security numbers, employees’ licenses for driving and simple numbers needed regarding business income. Some practical business background may be required and asked for as well.
Shopping for insurance is really no different than searching for the best price of apples and oranges. Look around and get pricing from a few different sources in order to compare and get the best value for your money. It is best to find out the full details and reputations about potential insurance companies that you will be dealing with. When you feel you’ve done enough searching and comparison, then based upon all of these factors you should make your selection. Finally as a part of the process for bonding you should present your very own history check and be ready to clarify any problematic issues on a criminal and/or credit record as well as that of your workforce. Unfortunately, this process can result in the firing or letting go of employees who may hinder your prospects of getting this insurance. When approved, you will then make your first payment for the premium and get a chance to examine your coverage paperwork when it arrives via mail.
The process for getting insurance includes identifying what types of insurance your particular business will need to be in operation. Let it be known that it is very often essential that most businesses are required to have liability insurance. You should also collect the imperative data you will need in order to arrange for a recommended insurance policy. This is very similar to the process for getting your bonding insurance. Again, go to more than one insurance company to see who has a package deal that is more suitable for your business and at the best rate. When you are certain you know what you want, then make your selection, make the first installment toward your premium and again, review any information that will be sent to you in order to verify that you have put money behind what you had intended. As likely assumed, the cost of getting bonded and insured for contractors will differ, but normally the premiums will be in the range of .75% – 3% of the bond’s face worth. Due to the dangers and type of the bond, the actual cost will fluctuate depending on your particular circumstances.
For construction contractor bonding, the Federal government and other corporations issue bonds on a daily basis. This is normally done to raise capital in order to finance contracts or investments. To calculate the cost of this you would first need to determine what the contract sum comes out to; which means an insurance plan will be needed for the total amount of work that is going to be completed. For a project you would need to look at the
- Price of the contract on the (RFQ) or Request For Quote which is the amount that needs to be insured.
- Next you would figure out the array of spending costs. The range of construction surety bonds will normally scope from 1.5% – 2% of the contract amount.
- Now, you take the cost and multiply it by the percent cost spectrum for an approximate cost amount. As an example, if a project bid came out to $50,000 then the bonding cost will be within a range anyplace from $250 (.005* $50,000) to $1,000 (.02* $50,000).
In addition to construction bonding, pet sitters are also now being asked to be bonded. People love their pets and if anything ever happens to them, pet care professionals really should be bonded. Rates are typically much less than the construction industry, but shop around and search bond providers for the very best rates. Many pet sitting employers may also require you to show proof of auto insurance to protect their pets from expensive vet bills that result from automotive accidents. If you’re an insured pet sitter, and can claim that you are licensed and bonded, you’ll certainly beat out much of your competition in the market place.
As a reminder, the problematic issue with bonding is similar to that of other insurance where only particular events and situations are financially covered. If an event pertaining to a “natural” event that is other than what was agreed upon in your bonding contract happens to come up, the bonding agency will most certainly refuse to pay out the bond. It is absolutely critical that you know what coverage you have before you sign on the dotted line.