How many times have you heard of a contractor advertising that he or she is “bonded”? Do you know what that means? Most don’t, including the contractors themselves!
What does it mean to be bonded?
When a contractor states they are bonded, they are referring to a surety bond (whether they know it or not). So you may ask, what is a surety bond? A surety bond is promise of performance. It guarantees that the contractor will perform accordingly. However, you will need to find out specifically what their bond is guaranteeing. To do so, you will have to read a copy of the bond, as it will state exactly what the bond is guaranteeing (typically the terms of a license filed with a state or local municipality). Find out whether you need to get a surety bond or obtain insurance by using our insurance bonding guide.
How does the bond protect the public?
So what does the bond do if the contractor does not perform properly? It protects the contractor’s clients by paying out an amount up to the total bond amount. However, most bonds do have aggregate language in them. This means that a $10,000 bond can only pay out $10,000 total. So if there are 6 people making $2,000 claims, the bond will not be able to pay all their requested amounts. The surety will then pursue the contractor for repayment of the claim amounts as well as any associated legal fees.
How do I get bonded?
Whether you are a contractor or any other profession required to post a bond, the process is the same. First, you must submit an application. Once approved, you will be required to pay your annual premium and sign an agreement (usually) that you hold the surety company harmless in the event of a claim. Once the agency has payment and a signed agreement they can issue the bond to you.
Are there any specialty programs available?
Yes there are! As of recent our agency teamed up with some of the nations biggest surety companies to create a specialty contractor license bond program. It allows us to write contractor license bonds at lower rates than our competitors for almost any situation. Whether you have low credit, no credit, bankruptcies, tax liens, bond claims, child support, etc. We can help! Start now by applying online.