What Does Bonded and Insured Mean and Does It Matter?
Businesses will sometimes indicate that they are “bonded and insured,” but what does being bonded and insured mean exactly? And does it matter if a business is bonded and insured?
The answers to these questions are important to small businesses and their clients!
The Difference Between Insurance and Bonding
The small business insurance that biBERK provides protects your business from the many types of risks you face every day—risks that can create unbearable financial burdens in some cases.
Specifically, we offer:
- Workers’ compensation insurance.This coverage protects employees and their families if a worker is injured, killed, or becomes ill at work.
- Professional liability insurance.Sometimes called errors and omissions or E&O insurance, this coverage protects individuals and businesses that make a living by offering professional advice or services in the event that they’re sued for mistakes they make or are alleged to have made.
- General liability insurance.This insurance covers liability for things like non-employee slip-and-fall accidents, employee damage to customer property, and other risks.
- Business owners policies (BOPs).This type of policy provides liability protection plus coverage for things like damage to an owned or leased business facility.
- Commercial auto insurance.This type of policy covers damage to company-owned or leased vehicles plus liability in the event of an accident.
- Umbrella insurance.Umbrella coverage can kick in when a biBERK liability insurance policy has exceeded its limit to pay the difference, up to its own limit.
- Cyber insurance.This is an important protection for every company that manages sensitive information that covers computer hacks and data breaches where fraud has occurred or is likely to occur.
These policies provide important financial protection, and also powerful peace of mind. However, in some situations, a client or customer may also require that a business purchase what are called surety bonds before a project begins.
These bonds provide financial protection specific to claims of work that is poorly executed or incomplete, as well as allegations of fraud or theft—all issues that business insurance does not cover. There are three parties to a surety bond:
Three of the more common types of bonds are:
- Contractor/construction bonds that indicate that the company agrees to comply with the regulations specified in a building permit
- Fidelity bonds that protect a company (or organizations with which there is a business relationship) from fraud by employees
- Janitorial bonds that cleaning companies often are required to have in case the work they do is deemed unsatisfactory
Bonds can be required in a wide variety of industries, but they’re particularly common in construction. The way they work in that industry is that the client requires a contractor to purchase a surety bond. Then if, for example, the contractor fails to complete the project, the client can file a claim with the surety company to be compensated for the cost of finding and hiring another contractor to complete the work.
How to Get Bonded and Insured
Companies wondering about how to get bonded and insured will be glad to learn that this can be done quickly and efficiently. You simply need to contact the surety company to purchase bonds and biBERK to buy the appropriate business insurance coverage.
As noted on the website of the U.S. Small Business Administration, “The Small Business Administration (SBA) guarantees bid, performance, and payment surety bonds issued by certain surety companies.” The agency does this to help small businesses compete for work more effectively. It’s important to keep this in mind if you operate a small company and need to be bonded.
As for insurance, you can get instant, online quotes from biBERK for the policies you need. After deciding on your coverages, you can also purchase policies online with coverage that starts soon after—typically within a day or two. Later, if you need to file a claim, you can do that and manage your policies online as well.
Why Being Bonded and Insured Matters
Once you’re insured and bonded as requested by your client, you can get to work confident that you won’t end up with a large financial burden if something unexpected occurs. And your client has similar confidence, knowing that steps have been taken to protect them financially.
Companies that choose not to be insured and bonded may miss out on business opportunities since some organizations will refuse to do business with those who don’t take these steps. Even if there aren’t strict requirements regarding your company getting bonded and insured, doing so can help build trust with your current or potential clients or customers.
Licensed, Bonded, and Insured
In some scenarios, a company must be licensed, bonded, and insured. That simply means that the company is bonded, insurance has been purchased, and any relevant licenses have been obtained.
Being licensed means that you’ve met a set of requirements specified by the authorities for the type of work you do and where you do it. As a result of being granted a license, you have the right to conduct business in that location. Often, there are one or more tests you must pass to prove your competency in your field.
Requirements for being licensed, bonded, and insured are more common in technical professions, particularly those in which there is a risk of injury to people affected by the licensed company’s work, including the client and potentially the general public.
Being Bonded and Insured Provides Reassurance Both for Companies and Their Clients
Ultimately, when a company is bonded and insured, it is reassuring both for them and for their clients. With the proper financial protection in place, both parties can focus on achieving a successful outcome for the project.
Learn more about small business insurance policies from biBERK today!