One of the most common surety bond requirements is a license bond. License bonds must be required by a third-party. If your profession does not require a license, you cannot get licensed and bonded, but should still get insured. To become a bonded contractor , you must first determine whether you are being bonded for a job or to work in a geographic location.
Contract bonds are what guarantee your work on a specific job. Usually, contract bonds guarantee construction of public work. As an entrepreneur, you may have run across the term "bonded and insured. 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. But you may need to have a contractor bond to cover additional types of damage that could occur on the job or claims against incomplete work or a shoddy job. Next Insurance offers an easy option to get general liability coverage within a few minutes online, but it's important to note that we don't currently offer contractor bonds. There are a lot of different types of bonds on the market.
Some of the more common ones for small business owners and self-employed workers include:. If your first question is, "what's a surety bond? A surety bond is a contract between at least three parties that protects against losses caused by one party not meeting contractual obligations. You pay the surety to take out the bond. If you fail to meet your contractual obligations to your customer, then the surety pays the fee or the fine to your customer.
In many cases, the Small Business Administration guarantees surety bonds to help small businesses compete for jobs. License and permit bonds are bonds that are required by government agencies.
Some bonds you pay with premiums. Other bonds are paid as a percentage of the coverage amount that you want. Fidelity bonds are paid this way and usually cost 0. This percentage is paid as an annual premium. The Small Business Administration will often guarantee surety bonds in an effort to help small businesses compete for work.
So check with the Small Business Administration when taking out a surety bond. This insurance pays the medical bills and lost wages for employees who get sick or injured as a direct result of their jobs. It is required by law in many states. Lucy Lazarony is a personal finance writer and journalist.
Prior to freelance writing, she worked as a staff writer for Bankrate for seven years. She earned a bachelor's degree in journalism from the University of Florida and spent a summer as an international intern at Richmond, The American University in London. She lives in South Florida. Select Region. United States. United Kingdom. Most businesses start with general business insurance.
It covers the business for theft, fire and other losses that might interrupt the business. Workers' compensation insurance is required for any company that has employees. Workers' compensation covers employees for injuries sustained during employment hours. Injuries may include employee injuries such as falling, on the job car accidents or use injuries such as carpal tunnel syndrome. The application for a workers' compensation insurance policy uses the same information as the business policy plus payroll and employee categories.
For example, a construction company with three office staff and 10 job site workers has rates in the policy that are split for the less risky office staff compared to the job site workers. Some states require new businesses to obtain workers' compensation through the state during the first year of business.
Your agent will let you know the details if this is required. This is different from the general liability offered in the standard business policy. They cover the business in the event someone makes a professional error.
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