'What does it mean to be bonded?' As the largest bonding brokerage in the U.S., we hear this question regularly. Being bonded means that an insurance and bonding company has procured funds that are available to the customer contingent upon them filing a claim against the company.
If you are a contractor or other type of business owner, you may have good reason to explore what it means to be surety bonded. While you might not need to research all of the complexities associated with a surety bond, you could find it helpful to gain at least a basic understanding of such bonds. If the law requires that you become bonded, you certainly should know what it means to do this. Even if not required by law to get bonded, you still might wish to do so if you are a business owner.
Consider the following points as a general overview when answering the question 'What does it mean to get bonded?' If you are still confused, call NFP today, as we are the bonding professionals! We'll take care of your surety needs.
If you have ever shopped for contractors to do work around your home or business, you may already be somewhat familiar with the phrase 'Bonded, Licensed, and Insured.' These terms are meant to impart a sense of security on the part of the consumer. In fact, being bonded, licensed, and insured does render a party more secure as a consumer. Licensing laws vary according to location and industry. Being insured means that you have purchased insurance, and you are covered if you need to file a claim against that insurance. Being bonded means that someone else is covered if you need to make a claim against the bond. This is according to The Hartford, which is a highly respected company.
Main Differences between Bonded and Insured
At this point, you may be confused about the differences between being bonded and insured. The primary difference between the two is that your insurance protects you, and a bond protects a third party. If you own a business and experience a fire on your premises, your insurance would cover the damages. The Small Business Administration, does a great job discussing surety bonds.
We are NFP, and we can bond you, and/or your business in just a few minutes, depending on the type. Some bonds, we can do almost instantly, while some others take a little longer. Learn how easily we can get you bonded.
If you are a contractor, for example, a contractor bond would protect your customers in the case of unethical or illegal behavior or business practices. Essentially, being bonded as a contractor means that potential customers may feel more confident about hiring you. By securing a bond from a surety, you are demonstrating your willingness to assume responsibility for any legal/financial issues that might arise as a result of wrongdoing on your part.
Another major difference between being insured and being bonded involves reimbursement. When you file an insurance claim, the insurance company covers your damages. You do not need to reimburse them for the coverage. In the case of a bond, the objective is to avoid the need to ever file a claim. A bond claim would be based on a misdeed that must be financially rectified, such as a theft that takes place during a job. Thus, the hope is that you will not need to file a claim. If you do, you are required to reimburse the surety for the amount paid on the claim.
Type of Bonds for Businesses
First, you should determine what kind of surety bond you require. We can help you to do this. You might need to secure a performance bond or an indemnity bond, which would secure your customer against loss if your obligations are not fulfilled. If your business seeks various permits, you might need to get a license bond. A payment bond would protect your laborers from the nonpayment of services rendered. Performance bonds are another type of bond that is similar to a payment bond. Court Bonds, tax bonds, contractor bonds, construction bonds, auto dealer bonds, DMEPOS bond, and Freight Broker Bonds are different kinds.
Meaning of Bonded
Now that you have a basic understanding of what it means to be bonded, you may want to know how to become bonded. First, you must apply for a surety bond. Call us today, and get the ball rolling on your particular bond type. Our surety bond professionals are standing by to make the process as easy as possible. You will need to provide documentation for your business. You should be prepared to show a business plan, as well as a list of your primary employees. You might also be asked to give information about contracts you currently have with customers. Fill out the free, Surety bond quote, and we'll contact you as soon as we can, and help you better understand what does bonded mean.
During the application process, you might also be required to provide financial documents, such as a cash flow statement, a balance sheet, and an income statement. One of our representatives will tell you exactly what documents we need to see.
Once we assess your application, we will let you know whether or not you qualify to be surety bonded. If you do, then we will tell you how much your premium is. We value risk and are here to help you out.