What Does Bonded and Insured Mean?

“Bonded” and “insured” are common terms you’ll hear if you’re a business owner. But what does it mean to be bonded and insured, and how can you be sure what your company needs? 

To clear up the confusion, here’s what it means to be insured and bonded, and some tips for choosing the right coverage for your business. 

What Does “Bonded” Mean?

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A bonded business has purchased what’s known as a surety bond. In a business context, surety bonds provide guarantees to customers that the work they’ve paid for will be completed. If work is negligent, careless, or incomplete, the bond is there to compensate the customer for their losses.      

Types of Bonds

There are various types of bonds, but the most common are contractor bonds, fidelity bonds, and janitorial bonds. 

Contractor Bonds 

Also known as construction bonds, these bonds assure clients that work will be completed to a certain standard and by a certain date. 

Fidelity Bonds 

Fidelity bonds protect a company, its customers, and its clients against an employee’s criminal or wrongful acts e.g. theft or fraud.   

Janitorial Bonds

Most often used by cleaning companies, janitorial bonds protect a business against claims of property damage, theft, or unsatisfactory work while the employee is on the job. 

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What Is a “Licensed, Bonded, and Insured” Business?

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What Does “Insured” Mean?

If you’re an insured business, you have some form of business liability insurance in place. Insurance protects your business against certain losses, such as damage, injury, and theft. 

Typically, every business should have a General Liability Policy. A General Liability Policy covers the costs of legal claims brought against you by customers and clients. The type of lawsuits you might face include property damage and personal injury claims, and if you don’t have insurance, you’ll be expected to settle these claims out of your business income.

Aside from general coverage, you might also want protection against problems such as fire, vandalism, professional negligence, and libel. The InsurePro team can help you determine what coverage best suits your business – contact us today to learn more.     

What Does it Mean to Be Bonded and Insured?

In simple terms, it means that you won’t be expected to personally cover the costs of breached contracts, property damage, or personal injury claims.  

As an example, what does bonded and insured mean for house cleaners? Well, clients will be indemnified if the cleaner fails to perform the job properly. And if the cleaner accidentally causes injury or property damage, there’s insurance in place to cover claims. 

What does bonded and insured mean for contractors? Similarly, the contractor is insured against causing property damage or injury, and clients can bring a claim if the contractor does not perform the job properly or on time.      

What Is a “Licensed, Bonded, and Insured” Business?

Now we’ve covered bonds and insurance, what about licensing? Essentially, a licensed business has the right to carry out its line of work in a certain state. It has met the minimum standards required to operate legally within a certain area. 

So, a licensed, bonded, and insured business is one which is competent and financially protected. You’ve paid extra for surety bonds to give your customers more confidence in your work, and you’re covered in the event something goes wrong with your business. 

Why Your Business Should Be Bonded and Insured

Not sure if you really need a bonded and insured business? Here’s why it’s worthwhile.

• If you’re insured and bonded, you face steep financial costs if things go wrong. In serious cases, these costs could lead to bankruptcy. 
• Being bonded and insured makes your business appear more professional and legitimate to prospective clients. 
• Large (and potentially lucrative) clients often expect you to have licenses, bonds, and insurance in place before they’ll hire you.

No matter how small your business, bonds and insurance can be worth it.   

How We Can Help You Find the Right Insurance Policy

Confused about what insurance or bonds your business needs? We understand – choosing business coverage can seem overwhelming. 

Our experienced team can walk you through your options and help you determine what cover you need to protect your business. We’re committed to keeping the process simple, so you can focus on running your company rather than worrying about insurance.

Ready to learn more? Get the best insurance for you!