Bonded?

bigchaz

I just started getting myself to where a real busines should be and got myself general liability insurance for the business

However lots of businesses seem to advertise "bonded and insured"

What is bonded? And do i need it?

Debookkeeper

Bonding is just a different form of insurance. It is more of a guarantee to the client for the work being done (not completed or if their house burns down, etc.) I beleive you take out seperate "bond" policy per job. It isn't necessary unless it is required. Work performed for your Town, State, and some large companies usually require bonding. Think of like a Sewer contractor that has to cut the town road to connect to the sewer main. The town usually requires a bond for a certain length of time in case the road patch fails.

joasis

Some municipalities require a fixed bond amount, and some states require a bond equal to your expected work volume for a year to be posted if you maintain a contractors license. Bond underwriters usually will look at credit worthiness, your bank statements for a few years, and vendor credit to determine your bond.

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mdshunk

I'm required to be bonded just to maintain my license (100,000K). If you intend to bid on commercial or government work, you'll usually need a bond in the millions. I'm only bondable to 1.25 million, based on things like credit and bank account balances, so that limits the sort of things I can bid on. That is good for me, since I have a bad habit of bidding on things that I'm not exactly sure how I'm going to staff if I win the bid.

eastend

regarding bonding; my surety company tells me that I would be personally liable - even though my company is a corporation- for any performance bonds, bid bonds, or materials bonds.

Does any know if this is normally the case?

nadonailer

California requires a bond to get a license. It's minmal in most cases but they won't issue or renew your license without a bond in place...

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HUDSONVALLEYEXT

You would only need to be bonded to get a license it cost us $250 for 1 year in the amount of $25k. Getting bonded if your not required might sound better to customers

Luke's Dad

Here's the deal...



My wife works for a surety (construction bonding) agency... By being bonded the owner of the project is guaranteed that you are going to complete the job 100% and all suppliers and subs will be paid so their will be no liens on the project. If you fail to complete the project the bonding company steps in and finishes the job. You never want this to happen because the insurance company will recoup their cost. When you are approved for bonding you will be required to sign both personally and corporately to get the insurance.

When a new contractor is starting out the bonding company looks at your companies financial worth, personal worth and your ability to sucessfully complete the job you are bidding. They then charge you a premium of $15-$30 per thousand of the contract price. Many times they also take collateral until you have a proven track record of being able to complete jobs in your project range. In Pa and NJ this is a per job cost not a blanket bond like in CA.

Hope this helps

tkle

Also it is deceptive to advertise being bonded( performance bond)in California.I believe illegal because it implies that you're above the rest when it's required for all.

bigchaz

Do you really think it would be negcessary for a sole prop. with no government work with contract prices rarely goin over 1000 dollars? Also North Carolina has no licese requirments in my trade that could warrent getting bonded for that reason

donb1959

Chaz,
I'm in NC as well, I'm an LLC and my bids frequantly are over 3K, I'm not bonded. I have a detailed contract that's signed by both parties, that contract explains exactly what I will do, I don't feel I need a surety bond.

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747

a surety bond will be what ever is included in the rider. My advice is get another policy one that includes that in the rider. Those would be three things normally left out of a general surety bond but as i have stated could also be included in the rider.

tkle

Some generals require bonding and liability.

Luke's Dad

I would say in this case a bond would not be necessary.

mdshunk

You're confusing a "performance bond" with a "professional licensing bond". They are quite different.

jwbond

Bonding and insurance are NOT one in the same...You can read about the differences at:
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