Surety and insured: what does it really mean?

You’ve heard him ask many times before. You may have even asked yourself, but what does bonded and secured really mean? Why do you need to ask providers about this? Is this really important?

First, I’ll explain what each one means. Later, I will go into detail about what is important with these terms.

There are only three types of bonuses available. The first is a surety. This only applies to people trying to get out of jail, therefore it does not apply to hiring a provider. The second is an employee dishonesty bond, or a surety bond, as they are also called. The third is a performance bond. These are frequently used by contractors to guarantee their services.

I’ll stop talking about the bail.

An insurer issues an employee dishonesty bond or surety bond to protect against theft. These are issued in various quantities. The most common is $ 5,000. I will use an example of how this would work. Let’s say you hire a contractor to work on your home. In the process of her work at home, she notices that some of her jewelry is missing. You communicate with the police and the linking company. After an investigation, it is determined that the contractor took your jewelry.

The surety company will notify you that it will award the jewelry price or the maximum amount covered by the surety. The surety company will await a conviction from the person who took your jewelry. If the adjuster determines that the value of your jewelry is $ 6,000 and the surety bond is $ 5,000, they will award you $ 5,000 because that is the maximum covered by the bond. There are conditions for this. The surety company will only grant the amount if the item is not recovered. And the surety company will only award compensation after a court conviction is carried out.

A performance bond is hired to guarantee the service or work. Again, another example. Let’s say you hire a contractor to build your dream home. The price to build your home is $ 250,000. You may be issued a bond for the project at the contractor’s expense. This would cover you if the contractor tries to leave before the project is completed. Or if the contractor does not comply with the obligations agreed in the contract. If you go through a bank to have your home built for you, they will most likely require bail to be issued, as they will be more exposed to loss. Compliance bonds can be contracted for a variety of things, but are most often used in the construction or contracting business.

Speaking as a cleaning business owner, there are things more important than a bond. There are many companies that cover theft internally. That is, they have a theft policy and cover themselves for losses due to the size of their companies. If it’s robbery, just ask up front, “What is your policy on employee theft?” You’ll also want to ask about background checks on staff. If a company is willing to cover theft internally, you can be sure it will use an accurate criminal record search.

When it comes to insurance, the insurance referred to is called commercial general liability insurance. This insurance will provide coverage for a variety of things. Some of the things that are covered are: damage to your premises, personal injury, and finished products or operations (labor). We’ll break down each of these for more explanation.

Damage to your facilities includes accidents. If you hire a floor service to strip and wax your floors, they lose control of their equipment and damage a wall. This would be covered by commercial general liability insurance. The deductible would be the responsibility of the contractor or supplier. There are a variety of things that can be damaged on your premises. Be it paint scratches, broken glass or damage to its contents.

Personal injuries in this case would include injuries to your staff caused by the supplier’s staff. Let’s say the same floor service company injured its staff when it lost control of its equipment. This is covered by some commercial general liability policies. It is important to note the amount covered in these separate items.

Completed operations or labor are a wide range of items. If the same flooring service company failed to deliver on its promise to peel and wax your floor, this would be considered full labor. If damages occurred during this process, this is also covered, as are the damages mentioned above.

To seek compensation for anything that is covered by commercial general liability insurance, there are several steps that must be followed. First, the insurance company should be contacted as soon as possible. The insurance company will then send an adjuster to assess the damages. Once a damage figure is established, the insurance company will contact you to compensate for your damages. If there is a deductible on the policy, it is the contractor’s responsibility to pay it.

There are several things to do when interviewing a potential vendor. First, request a copy of your insurance. Then contact the insurance company to make sure the policy is valid and current. You can also ask at this time exactly what is covered. This will be of great help before hiring any provider.

If a provider is uninsured, you risk loss from any damage you damage. Sure, you can sue your business if they damage your facilities, but if they don’t have insurance, what are the odds that they have assets to cover their losses?

In closing, the most important thing to consider is commercial general liability insurance. If a prospective supplier doesn’t have a commercial general liability insurance policy, avoid it like the plague. If a provider tells you they have commercial general liability insurance, ask for a copy. Then contact the insurance company listed above and verify the validity of this policy. Also, ask about coverage amounts.