What It Means To Be Bonded, Licensed & Insured

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Bail BondsWhenever a company offers its services, it’s generally quick to note that it’s bonded, licensed, and insured (when it applies and if they are) but I was never certain what that actually meant. Until now, all I knew is that you should only hire someone if they’re bonded, licensed (if applicable) and insured. Often times someone who isn’t will be cheaper, but you will have to accept all of the responsibility if something bad happens and, as Murphy’s Law clearly states – if something bad can happen, it will. (Incidentally, that picture of the bail bonds company is only somewhat related to what it means to be bonded)


Being bonded means that a bonding company has secured money that is available to the consumer in the event they file a claim against the company. The secured money is in the control of the state, a bond, and not under the control of the company. Let’s say that you hire a cleaning company and they end up stealing your Nintendo Wii. Well, you would file a claim against the company and, after an investigation, would be paid out by this bond.

This is slightly different but similar to what it means for an employee to be bonded. Being bonded in that case means that a bonding company has investigated your background and finds that you’re trustworthy and “good” enough to insure. In general, this is generally done when an employee has to handle large amounts of money or handle valuable property like jewelry or art. There is a very extensive and deep background check involved and what the employer gets is insurance that you won’t steal. If you do, then the bonding company pays out the amount of the theft. By being bonded, it shows that the employee is trustworthy enough for a bonding company to insure you up to a certain amount. Now, a company that is bonded means that a bonding company has funds


For certain professions, a license is necessary to show that you’re competent and permitted to conduct business in the city, municipality, or state in which the license was issued. For example, home improvement contractors will have to be licensed to perform certain types of work and that license number will be printed on every advertisement they print. You can take that license number and look up their performance history in most states through the Better Business Bureau.


This is probably the most commonly understood of the three (second to being licensed) and this refers to what happens if someone gets hurt on the job. Let’s say a company is fixing your roof and a roofer falls off and hurts him or herself. If the company isn’t insured, then the claim gets filed against your homeowner’s insurance (bad). If the company is insured, then the claim gets filed against the roofing company’s insurance.

In summary, it’s important that anyone you work with is licensed, bonded, and insured. There’s no reason why you should have to work with someone who isn’t all three, unless being licensed doesn’t apply. Once you know that they are, research and confirm that they are being truthful. I can say that I’m bonded, but unless I provide the documentation and you can verify it, I’m not actually bonded.

(Photo: whitetrashtexas)

{ 103 comments, please add your thoughts now! }

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103 Responses to “What It Means To Be Bonded, Licensed & Insured”

  1. betty says:

    if I hire a tree company to take down a tree and they are license and has insurance but not bonded what would I be liable for

    • It’s not a matter of your liability, but their ability to pay damages. If they’re not bonded then there’s no money secured with a bonding company. So if they drop the tree on your house you may have to wait to collect damages, and if they go bankrupt you are SOL!

    • Tom says:

      That’s not 100% accurate. Bonding is to guarantee completion of a job or against theft. Insurance is for damages. If a tree company were to drop a tree on your house, their insurance company would be on the hook for the repairs. Your insurance company may do the repairs then subrogate the costs with the tree service company’s insurance company.

      • kirk says:

        thanks.Soooo many people on here dont know waht the heck they’re talking about.What he described as “bonded”sounds a like workers comp.

  2. Bridgette says:

    I”am starting my own Housekeeper Business,I do not have no employees right now so, should I just get bonded and licensed first.Should I get my Insured last once my business take off.

  3. annonymous says:

    Neither. Conduct ethical business. Let the customer know that you are not bonded, licensed, and insured. Make them sign a contract with those words in bold, explicitly alluding to the fact that they are responsible for anything if any mishaps occur; they took the risk of doing business with you. You are not liable, it is only an option.

  4. annonymous says:

    Getting bonded, licensed, and insured costs a lot of money. Do not spread your budget thin by spending cash on something that can wait until it is a priority.

  5. Amuseum says:

    Thank you for all of this information. It is very helpful!

  6. lisa-lisa says:

    ok so if ur bonded and licensed is that good if u running a housekeeper co.

  7. lisa-lisa says:

    and how much do it cost just for that….

  8. Tony 55 says:

    I want to start my own pet transport co. Does this still apply?

  9. Anonymous says:

    I want not star a small carpet cleaning company do I have to be insure if is only me

  10. ANN WILLIAMS says:


  11. Henry says:

    Do you have to be bonded and license to have a legit business. because I’m registered as a business and I only get insurance on job to job basis.

  12. Shane says:

    No wonder so many businesses fail! Haha

  13. Max says:

    why is the homeowner liable if the contractor is not licensed, insured and bonded if the cause of the injury suffered by the contractor is due to his fault?

  14. Ciara says:

    I have a small cleaning company and no employee’s. I am insured but not bonded/ licensed. I only contract out with other business’s who are insured/ bonded if I can not personally do the work myself. It is expensive getting a small business off the ground so I found this to be a great alternative for now. If you have an LLC. Isn’t that enough without having to be licensed?

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