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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)

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

Licensed

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.

Insured

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)

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

  1. Maggie says:

    I am being asked to do some companion work at a retirement home. Is it appropriate to seek bonding. How much does it cost for an individual.

    • Anonymous says:

      I have a similar question though I will be starting a business and am hoping the majority of my work will be in one Retirement Community.
      I will be the only employee to start. Representative from R.C. feels I could have up to 5 vehichles by a year. Thoughts?

  2. Mary says:

    I want to start a janitorial service company, I need to know whta are the requirements o get a bond, how much money do I have to leave in the bond, do they check the credit to give this to me?
    Thank you
    Mary

  3. bobby kincaid says:

    if im trying to get my contrators license do i have to be licensed ,bonded, and insured before i can take it or not?? and if so it ver y costly???

  4. joyce says:

    i started my own business doing tree work, my insurance provider told me that i dont need to be bonded and that it isnt neccessary, is that true, and do i need to be exempt from workers comp because my bill will be higher though im not always in the field

  5. Anonymous says:

    There are a couple of different types of insurance, both pertaing to different accidents. There is Workers Compensation for personal injury, and general liability for property damage. A company in some states can decide to exemt themselves from being able to file a claim for injury because the cost of this insurance is high in part due to fraud in my opinion.

  6. Patti Nimmo says:

    I have a roof put on three yrs ago, 30 yr shingels but now it has water stains in 14 places in one room and a new big one in the main part of the house. If I sue to have it replace who do I sue, my insuance says they are just water stains not leaks, i had another roofer look at it and he said it all had to be replaced. Trouble is we now have the same insurance company and I am scared they will cancel my insurance policy. I only make 784 dollars a month and can’t extend my house loan do to them changing the flood plain law here in 2008. What can I do?

    • Joan says:

      Have you recently had a hail or wind storm in your area? This can cause leakage and it may be that the damage is a result of a recent storm and not the installation. Poorly installed roofs typically leak within the first year. Before suing anyone, I would call the roofer who installed the roof and have them come out to identify the problem. It could be a unit in the attic that is leaking, or it could truly be the roof. If they are no longer in business, call a local, reputable roofer to do a roof inspection. A legitimate one will come out to inspect for free. Where are you located?

  7. Kat says:

    I want to start branching out with my cake business. I work word of mouth and have been successful for over 23 years. I want to be busier and reach out to hotels and more. Can i just invest in an occupational liscence and apply for a ficticious name which i already use? I do most of my work thru a large country club using their facilities but i want to offer my services to other establishments.

  8. jim says:

    I work for a company as a driver,during the day i collect alot of money from the employlers customers that i am responsable for.My question on this matter is shouldnt i be bonded for handling such a large amount of money everyday and who should be responsiable for you getting bonding?

    • Hello Jim,

      My name is Danielle, and I’m the director of educational outreach at SuretyBonds.com. 99% of the time, individuals only purchase surety bonds because a government agency, project owner or other individual is requiring the bond protection. (Business service bonds, janitorial cleaning bonds and employee theft bonds are optional types of surety bonds that some business owners choose to purchase as a way to reassure consumers that they run ethical enterprises.) So, if nobody is requiring you to to have a bond, you don’t need one for your line of work. The best way to determine whether you should be bonded is by contacting whatever government agency issues you your business license.

      Let me know if you have any other questions. I would be glad to help!

  9. Joe says:

    Is theft by an employee covered? If not how can it affect the bond? Is the consumer left witha small claims case?

    • My name is Danielle, and I’m the director of educational outreach at SuretyBonds.com.

      The exact protection provided by a bond varies depending on the specific terms outlined on each bond form. Generally speaking, employee theft is not usually included in a standard bond form. There are, however, bond types whose sole purpose is protecting clients from employee theft.

      Business service bonds protect your clients from employees who might choose to steal. These bonds are typically sold to cleaning companies and other businesses that work in clients’ homes/businesses where there is a potential for theft. If theft does occur and the employee is convicted, the consumer would be compensated using funds from the bond.

      Unless a valid claim is made on the bond, theft should not affect a bond’s terms.

      Does this answer your question fully? If not, you can learn more about these types of surety bonds here: http://www.suretybonds.com/janitorial-service-bonds.html

      Let me know if you have any questions.

  10. Mike says:

    To the author of this article. Please put some sort of statement to the effect that you are not providing legal advice, and, that any inquiries specific to individuals and their operations should be directed to their respective lawyers, insurance agents, or local regulating authorities (i.e. Workmans Comp etc.).

    For the people inquiring about past police records, call your local authorities and inquire about the process of getting a pardon, this could erase all but the worst of offences and give you a clean slate and a clear conscience that you won’t have any complications from your past.

  11. Daria says:

    I am wanting to start a Non-Medical Companion Care Company in the area in which I live. Did anybody got a respond on that?

  12. So frustrated says:

    I am so frustrated with my roofer. I have been trying to contact him for over six months. My roof is leaking and it is now running down the wall. I just renovated my bathroom and now the ceiling and the walls will need replacing. Is there anything I can do?

  13. Jay says:

    So are you saying that anyone with a felony cant sell insurance, real estate, etc?

  14. DavidS says:

    If you ask me, if anyone works on your property, then they should be insured to protected themselves from injury, the home owner should be not held liable for someone that gets hurt on the property; The property did not injure the person, the home owner did not injure the person; It was due to carelessness. If i hire a roof contractor, and he brings subs to work on the roof, which is risky in itself, then the contractor should have insurance that covers himself, and all subs. Why should property owner be liable for carelessness? or someone not smart enough to be insured when working on someone elses property; rather then blaming or suing the property owner for something he didnt do; If you work on anyone’s property, then you should get full insurance…

  15. Joy says:

    I am tryin to start a cleaning business and would like to know the total costs it takes to have insurance , bonding and liscensed?

  16. Mirsada says:

    Some answers to these questions would be appreciative!!!

  17. Confuzzled says:

    Why are people expecting answers from this website for their problems? This is a website that posts vague articles to draw in people for ad revenue. This isn’t a Q&A people.

  18. martin says:

    Can I be bonded after bankruptcy.

    • Joan says:

      Can I be bonded after bankruptcy?

    • It depends on the type of bond you need. If you need a risky bond type, you might not be approved. However, some underwriters will issue surety bonds to applicants with bankruptcies on their records. It really varies on a casey-by-case basis. The best way to find out if your bankruptcy will affect you ability to get bonded is by contacting a surety bond company.

      -Danielle Rodabaugh, Director of Educational Outreach at SuretyBonds.com

  19. ellie says:

    Landscape Contractor agrees to maintain licenses as required by law
    (Washington State).

    Contractor is Bonded-Licensed-Insured

    Do these two statements mean the same thing? If NO what is the difference?

  20. F JONES says:

    Contemplating starting a small security companym,both my husband and brother in law are cops…is that considered a conflict??and would we have to be bonded?Help

  21. Anonymous says:

    The insurance part of this is WRONG! Do not post something on the internet that will determine if I get a contract with someone and you are making wrong statements…with that said insured means that if damage is done to property by the contractor it will be covered by the insurance agency.

    Workers Compinsation Insurance is to provide for an injured worker.

    • Keeter912 says:

      As a licensed electrician, if I go to someones house to do a job on my own and get hurt, it is the home owner that is responsible for my injury. I.E. not having ‘insurance’ means not having workmen’s comp. Liability insurance would cover anything that gets damaged.

  22. tony says:

    I want to be a bounty hunter(FRA)
    How much money do i need in order to get bonded?
    where can i go to be bonded?

    • You’ll need to check with whatever government agency regulates bounty hunters in your state. This agency will inform you if you need a bond and then tell you how much coverage you need if you do need a bond.

      The price you’ll pay will be based on how much coverage you need. The best way to determine your surety bond cost is by getting a free, no obligation surety bond quote.

  23. Dorothy says:

    I am hoping to start a house cleaning service can anyone tell me do I need bonding and how much does insurance and bonding cost. I have no spare funding at the moment. Also I have run a business and been police checked for the past twenty years but due to recession my business went into receivership, do I have to tell clients this, I am totally honest and have no criminal record. please help.

  24. Keeter912 says:

    I worked for a small electrical shop for the past year. I was insured and bonded. My work van got broken into and all of the wire was stolen while I was working. Is this covered under bonding or some other type of insurance? (My boss is telling me that I am responsible for replacing the wire even though my van was locked) (And a $300 rotary hammer drill, along with MY tools that were stolen also…)

    • Bonds would not cover your loss, only insurance would (if you have an appropriate policy that expressly covers such an unfortunate circumstance).

      Surety bonds *typically* protect consumers from industry professionals who fail to fulfill some sort of obligation. Unlike other types of insurance, bonds *typically* do not provide any sort of protection to those who purchase them.

      -Danielle Rodabaugh, Director of Educational Outreach at SuretyBonds.com

  25. Andrea says:

    How do I find out if a company really is licensed, insured and bonded? my daughter is having work done on her house and they just found out that the company has not gotten a permit to work on their house in their city. They are having numerous problems with the owner and his workers.


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