Bonded and Insured
Do you need to be bonded, insured, or both? It's a common source of confusion, and while it's totally understandable to mix these two up, it's also vitally important to understand the difference. Read on for an easy explanation of everything.
Bonded and insured definition
Seemingly similar, bonds and insurance policies are actually not the same product. In the case of insurance, the policy holder may file a claim against the policy seeking financial compensation. Insurance involves two parties (the insurer and the insured) and works to protect the policy holder.
There are three parties involved with surety bonds: the principal (bonded party), the obligee (bond beneficiary) and the surety (bond issuer). Obligees may file claims against the bond seeking financial compensation if they believe the principal has broken the terms of an agreement. Unlike insurance, the bonded party gets penalized for claims.
When you hear someone use the phrase "bonded and insured," it typically means they have both in accordance with the law. Contractors, for instance, often must have both insurance and a bond to operate legally. Local, state, and federal governments often mandate that certain types of professionals and businesses have bonds backing them. Similarly, many contractual agreements between private entities incorporate bond requirements as well.
How to get bonded & insured
In most cases, getting bonded and insured means working with two separate companies. For the bonding half, count on Viking Bond Service to make the process simple and straightforward. Before you get started, consider the different kinds of bonds you may need.
- License & Permit - Necessary for getting a professional license or project permit.
- Construction - Necessary before proceeding with a contracted construction project.
- Commercial Bonds - Necessary for opening and operating many kinds of businesses.
- Contract Bonds - Necessary for sealing a contractual agreement.
- Court Bonds - Necessary for compelling the court to hear certain types of cases.
How to get a Surety Bond
Before learning how, consider when. Bonds exist for a reason: to make one party feel more confident about committing to a formal arrangement with another. Therefore, when bonds are required, they must be in place before anything else proceeds. If one of those requirements applies to you, find a surety able to issue a bond ASAP - there's no benefit to waiting.
When you're ready to apply, you will need to complete a standard bond application. Expect questions about your finances and background. Depending on what kind of surety bond you require, the surety may ask for additional documentation, or possibly even collateral.
Underwriters at the surety will use all that information to quote you a price for the bond premium. Premiums are typically a small percentage of the bond value, meaning for a $100,000 bond you may only pay a few thousand dollars depending on your credit. After paying, the surety will give you documentation to prove you have the required bond.
Apply to get Bonded & Insured
Ready to get a bond of your own? Viking Bond Service, a nationwide surety broker, makes it easy. Complete our online bond application at any time, and expect to get a quote back fast. Or learn how to contact our team to ask questions and get more information.
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Credit challenges are not always a barrier to obtaining a Surety Bond. Often times, Viking can quote your request despite a poor credit rating.
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