When you think Bond, what do you think? I am guessing somewhere between English gentlemen and MI6 covert intelligence agent. But that might just be me. 007 has been frequenting our bookshelves and the silver screen for decades now (over sixty years now) and while he may be a great source of cinematic escapism he cannot do much for your business. As a contractor you need a more practical bond. One that will cover your assets like James Bond (but with a little less collateral damage and a lot less gambling). You need contractors’ bonds insurance. Here is what you need to know about bonds and insurance requirements for contractors.
What is contractors’ bonds insurance?
Contractors’ bonds insurance is an insurance policy that is designed to keep you, your equipment and your business safe from claims made by clients. The most popular, current, form of contractors’ bonds insurance is surety bonds insurance. The surety is a company that is licensed to write bonds while the bond acts as a three-way contract between you, the owner and the insurer.
While this may sound like a more in-depth general liability insurance policy it, the bond, is not an adequate form of protection on its’ own. Contractors bonds should complement your other insurance policies. It is like adding on an additional piece of armor to protect you from financial liability (one that would be fairly useless on its’ own). But, in a pinch contractors bonds can give you the best protection from projects that may have gone awry. Bonds are also typically required (by lending companies) when a contractor accepts a larger, more expensive job.
Are there different types?
There are two different kinds of surety bonds, and, which one you choose will depend on your own insurance requirements. They are listed below.
- Contract bonds
- License bonds
Contract bonds are comprised of bid bonds, performance bonds and labor and material payment bonds. These bonds will cover you in the event that you cannot complete a contract, will cover your performance and can protect you from liens directed at your property.
License bonds are typically required by state or federal law (depending on the project) and are designed to protect the public in the event that something goes wrong. Coverage will depend on your company and the project but we will work with you to make sure you are adequately covered.
If you have any further questions or would like to meet with one of our representatives please feel free to give us a call at 1-800-649-9094. We look forward to hearing from you!