As a homeowner or business owner, it`s important to know that the contractor you hire for any job is both bonded and insured. While many people use these terms interchangeably, they actually have different meanings and provide different types of protection.
A bonded contractor has purchased a surety bond, which is a type of insurance that protects the client from financial loss if the contractor fails to complete the job, does poor quality work, or otherwise causes damage. In essence, the surety bond acts as a guarantee that the contractor will fulfill their obligations and meet the terms of the contract. If the contractor fails to do so, the client can file a claim against the bond and receive compensation for their losses up to the amount of the bond.
On the other hand, an insured contractor has purchased general liability insurance and/or workers` compensation insurance to protect themselves and their clients from accidents and injuries that may occur on the job site. General liability insurance covers damage to property or people that is caused by the contractor`s work. Workers` compensation insurance covers medical expenses and lost wages for any employees of the contractor who are injured on the job.
It`s important to note that while being bonded and insured is not a legal requirement for contractors in all states, it is strongly recommended that clients only hire contractors who have both. This provides an extra layer of protection and peace of mind for both the client and the contractor.
When hiring a contractor, always ask for proof of their bonding and insurance. This should include a copy of their bond and insurance policies, as well as any relevant certificates or licenses. Don`t be afraid to ask questions or seek clarification if you don`t understand something.
In summary, being bonded and insured means that a contractor has taken steps to protect themselves and their clients from financial loss and injury. As a client, it`s important to ensure that any contractor you hire has both bonding and insurance to protect yourself and your property.