When you say that you are licensed, bonded and insured, you have the required licensing for your business, proper insurance and you have made payments for additional coverage with a bond. A bond is like an added level of insurance on your coverage plan.

Is a bond considered insurance?

The surety bond covers the municipality against financial harm, but it is not insurance. If a subcontract issues a claim against that payment bond, the contractor who purchased the bond must repay the surety for any damages paid out. But surety bonds and insurance are two different risk-management tools.

What does it mean if your 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.

What does it mean if a contractor is bonded?

When a contractor states they are bonded, it means they either have a surety bond, fidelity bond or both. Most state or local governments require contractor license surety bonds for contractors to obtain their license, so let’s start with them.

What does it mean to be bonded and insured?

How are surety bonds different from liability insurance?

The main difference between liability insurance and surety bonds is which party gets financially restored, according to Alliance Marketing & Insurance Services, or AMIS. Surety bonds protect the financial interests of the consumer, whereas general liability bonds protect the company from having to pay a lawsuit out of pocket.

Why do you need a contractor’s bond and insurance?

Dear Farhad: A contractor’s bond and insurance are important forms of protection for you, the consumer. They help ensure that you’re more likely to be working with a reputable professional, and they provide some recourse should something go wrong.

What happens if roofing company is not bonded and insured?

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.