Many customers ask if you are bonded and insured. Here is what a bond actually is, when you need one and how it protects the deal.
In this article
What a bond is
A three-party guarantee between your company, the bond company and the customer or agency that requires it.
License bonds
Some states and cities require a bond to issue or renew certain licenses.
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Janitorial bonds
Protect customers against theft by employees. They help win office and commercial contracts.
Bond versus insurance
General liability covers damage you cause. A bond guarantees you will meet an obligation. Many businesses need both.
Cost
You pay an annual premium, usually a small share of the bond amount, based on the bond type and your credit.
Claims
If the bond company pays a claim, it will seek repayment from you. Avoid claims by documenting work and resolving complaints fast.
Renewals
Track expiration dates. A lapsed license bond can stop your license.
Getting started
Check your license requirements and ask two providers for quotes.
Common mistakes
Advertising bonded without a bond, treating it as insurance and missing the renewal date.
Example
A cleaning company kept losing office bids. After adding a janitorial bond and stating it in proposals, it won two commercial contracts in the next quarter.
How to show it
Add "Licensed, Bonded and Insured" to your website, proposals and trucks only when all three are true. Keep the bond certificate ready as a PDF for commercial customers.
What to track
Commercial bids submitted with and without the bond, and the renewal date in your calendar.
Price every call so it pays.
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Frequently asked questions
Is a surety bond the same as insurance?
No. Insurance protects your business. A bond guarantees your obligation to a customer or a licensing authority, and if the bond company pays a claim, it expects to be reimbursed by you.