What’s the Difference Between Contractor Bonds & Insurance?

Contract workers are required to attain a license or permit bond from a surety bonding company, such as ourselves. They are also required to obtain worker’s compensation and liability coverage for their crew. The difference between bonding and insurance can be a bit confusing and unclear. Read on to learn how to decipher between the two.

What is Workers Compensation and Liability Insurance?

Worker’s Compensation is a type of insurance policy that guarantees the injured employee to receive medical care, disability/rehabilitation, and have expenses related to the injury covered. Typically, while having worker’s compensation coverage, employees have their right to sue for negligence waived.

Some employees may opt-out of their employer’s worker’s compensation policy. Certain employees may have a pre-existing condition or injury not covered by worker’s compensation. In either of these cases, it’s important to maintain liability coverage, as the employee may file suit against the employer. Liability insurance protects employers from instances listed below.

Workers’ Compensation & Liability Insurance Covers:

  • workplace injuries
  • injuries occurring during work-related travel
  • injuries due to workplace violence
  • natural disasters
  • illnesses
  • fatalities

What is a Contractor License Bond?

Each state holds its own requirements for permitted construction work, but all require at least a permit bond and/or a license bond. Contractor license and permit bonds are a type of surety comparable to a line of credit and allow the contractor to perform work within that jurisdiction. The bond is an agreement between the contractor, the state licensing agency, and the surety company stating that the principal contractor will provide services in accordance with state and federal law (adhere to building codes, etc.)

If the contractor fails to fulfill the terms, a claim can be made against the bond, and the surety will investigate. If the surety concludes that the claim is legitimate, it will usually pay compensation to the claimant, up to the bond’s total value. The contractor remains liable for their obligations and must repay the surety, even though the surety company initially covered the claim. Therefore, these types of bonds are associated to a line of credit rather than insurance.

Summary of Contractor License Bonds, Workers Compensation, and Liability Insurance

  • A contractor license bond protects the contractor’s clients and the public. It’s a line of credit that, if used, requires the contractor to repay any compensation the surety had to extend out to the claimant(s).
  • Worker’s compensation is an insurance policy that covers employees in cases of work-related injuries.
  • Employer liability insurance protects/covers employers from lawsuits that may arise in cases of work-related injuries.

Understanding the requirements for permitted construction work can be complicated. At Construction Bonding, bonds are all we do. Call us today for professional, straightforward, and sound surety advice.

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 or visit us at www.bondingspecialist.com today.

Written by the digital marketing staff at Creative Programs & Systems: www.cpsmi.com

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Contract Bonds

The construction season is fast approaching, so those bidding on new jobs will need to make sure they have the appropriate contract bonds lined up to qualify for review. The process can be confusing, and unfortunately, some requests for proposal (RFP) contain vague language regarding the bond specifics. Those vying for government construction work and maintenance, often privatized jobs, will need a contract bond (or surety bond.)

Surety bonds are contracts between three parties: the principal, surety, and oblige. They provide a financial guarantee that one party will fulfill their legal, contractual obligations to another. A surety bond is more like a line of credit than insurance. Usually, construction contracts are completed to the satisfaction of all, where work expectations are met, and wages are paid out – the surety doesn’t need to get involved. If a disagreement occurs and the principal and the client (generally the oblige) can’t settle on a compromise, they can file a claim with the surety for financial compensation. The surety will investigate the claim, and if found legitimate, the surety will pay the claim in an amount up to the bond penalty.

A contract bond refers to several surety bond types. Below are the three most common contract bonds:

Bid Bonds: A bid bond is a prequalification indicating that the contractor is bondable for the performance and payment bond should they be read low or chosen by an Owner/GC/CM to enter into the contract and provide a Performance and Payment Bond.

Performance Bonds: Performance Bonds offer assurance that the bonded contractor will perform according to all contract documents.

Payment Bonds: Payment bonds assure that the bonded contractor pays for all materials and labor associated with the documents related to the contract.

Need help obtaining a contract bond? CBS will help you determine the RFP bond requirements in order to submit a bid and consequently win the contract. Contact us today for assistance.

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At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover surety solutions for all types of cases ranging from ordinary to challenging. Call us at 248-349-6227 or visit us at www.bondingspecialist.com today.

Written by the digital marketing staff at Creative Programs & Systems: www.cpsmi.com.

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The Spring Bid Season is Fast Approaching; Obtain the Surety Bond You Need!

Your bond experts are standing by, ready to assist contractors in pre-qualifying their bond applications for municipalities, schools, and public works that will be opening soon. At CBS, our specialty is to help you get the construction bonds you need. We’ll decipher the paperwork and make recommendations to place you on top!

Construction Bonding Specialists offers a variety of surety bonds, including:

✔ Bid Bonds

✔ Performance and Payment Bonds

✔ License and Permit Bonds

✔ Maintenance Bonds✔ and more!

CBS knows what is required to expedite the process. We have years of experience in the industry, giving us an advantage you can count on. Whether you need a simple bond or something more complex, our professionals are ready to assist you.

BONDS ARE ALL WE DO!

Apply Now!

For more information about our bonds visit our website or call 248-349-6227

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover bond solutions for all types of bond cases ranging from ordinary to challenging. Call us at 248-349-6227 or visit us at www.bondingspecialist.com today.

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Efficient Surety Bond Producers

Surety bond producers are the middle people between the surety company and the contractor. Construction bond producers understand the surety and construction industries and are crucial when seeking to acquire surety credit.  

The surety bond producer can make or break an active contractor’s surety as they determine approval, bond size, and collateral obligations. They also act as the expert or guide for contractors aiming to secure a bond by working with surety companies on their behalf.

Some characteristics of efficient surety bond producers include the ability to create lasting relationships, awareness of local and national markets, accounting and financial proficiency, willingness to write within the market, capacity to review statements and bond applications, obtaining the most optimal rate, and suggests evaluations honestly.

Underwriters who have good relationships with producers are more likely to work with them to brainstorm new ideas or undergo risks they might not otherwise undertake with lesser-known producers. Since surety bond producers must thoroughly understand contracts and construction law, they should also be informed on local and national construction markets.

Aptitude in accounting and finance is of utmost importance when it comes to surety bond producers. Adequately evaluating accounts before underwriters see them is imperative to success. Professional producers do not engage with applications that will be declined. Reviewing financial statements and other bond application requirements is crucial, as the surety bond producer will also be mindful of the applicant’s credit.

Are you looking for a producer who can deliver? You’ve come to the right place! Contact the experts at Construction Bonding Specialists today to get started.

At Construction Bonding Specialists, we work with new and experienced contractors to find the most satisfactory bond solutions. As a distinct surety-bond-only agency with decades of bonding experience, we work to discover bond solutions for all types of bond cases ranging from ordinary to challenging. Call us at 248-349-6227 or visit us at www.bondingspecialist.com today.

Written by the digital marketing staff at Creative Programs & Systems: www.cpsmi.com.

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Happy Holidays!

To all our Construction Bonding Specialists friends and family,

Wishing you peace, love, and joy this holiday season and throughout 2022. We are so thankful for our wonderful clients, and we want you to know that we genuinely appreciate you!
Warmly, The Construction Bonding Specialists, LLC family

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Happy Thanksgiving to all our Construction Bonding Specialists friends and family!

Whether you will be spending your holiday with family/friends or planning a quick getaway to decompress, we at Construction Bonding Specialists, LLC wish you and your loved ones a safe and enjoyable Thanksgiving.   This year, we are thankful for our wonderful clients and want you to know we genuinely appreciate all of you!  

Warmly,
The Construction Bonding Specialists, LLC family
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