If you exercise due diligence and request more than one quote, one of the suppliers will mention that it is licensed, bound and insured if necessary. It is extremely unlikely that you will find three separate people without a license if a license is required. The same goes for bonds. The cost of the license varies depending on the location of your business, your industry, and the type of operation of your business. Think, for example, of electricians or even hairdressers. Although these are very different professions, each of them requires hours of training to deal with live electricity or complicated chemicals. That said, most clients consider it risky to hire an unauthorized person to do such an important job, such as rewiring a home with wiring. What does “licensed, tied and insured” mean? We explain the differences between these three terms and why all three are important for entrepreneurs. When you start researching different companies, there are minimum requirements they must meet before you should even consider reading reviews about the quality of their work. This is where the words “authorized, bound and insured” come into play. Let`s compare a general contractor to a state-certified shipping company when building a dike or wharf on your property.
While both could revoke the permit, both could claim to have the ability to complete the project, and both could offer general liability and workers` compensation, only the state-certified marine contractor will know the types of materials to be used in and near water, construction practices to ensure the structure can withstand hurricanes and other weather conditions, and all practices necessary to comply with local laws and regulations regarding aquatic plants and wildlife. Only the marine contractor can provide in-depth advice and experience, help you find the materials and design that best fit your budget, and ensure you get a high-quality final product that meets all local and national regulations. In addition, a state-certified contractor will cover with a USL&H (United States Longshore and Harborworkers` Compensation Act) shipbuilding specialty, which protects both workers and the owner, as standard (general contractor) insurance ends at the waterline. This example clearly shows that “licensed and insured” is not always enough. Just as you would be looking for a specialist rather than a GP for a specific health problem, you should look for a specialist for your home repair and construction needs. In the United States, companies often use the term “licensed and bound” to show their legitimacy and trustworthiness. A license means that the person or company has been properly trained in their field, while the bond indicates that they have set aside money to settle claims against them. Both protect against bad conversions, theft and illegal practices, and a client must also look for documented evidence of bonds and licenses. The insured part of this issue applies in several ways, more than workers` compensation to cover injuries sustained by their employees on the job.
Commercial insurance can also cover errors and omissions made by the company in the performance of its work, business interruption insurance, which covers loss of income resulting from a loss that disrupts business operations, and liability protection to cover the company`s legal liability for damage it may cause to others. There are many other types of coverage that can be added, but these are the most common ones that can affect a customer of the company they are dealing with. Many entrepreneurs will find that the cost of giving up obligations and insurance is a high price. Let us be realistic; Replacing expensive equipment or technology can quickly deplete a company`s financial reserves. In addition, legal fees can run into the hundreds of thousands of dollars and lead to the closure or bankruptcy of a business. With the right support, you can ensure that your business is there for the long haul. If a company is insured, it means that it has transferred a number of risks to a third party through an insurance product. There are many types of commercial insurance that can protect businesses from a variety of risks, but keep in mind that not all businesses need all types of insurance.
Similarly, landlords should only consider contractors who can provide a certificate of insurance for general liability as well as workers` compensation. Also require them to include you, the landlord, as an additional insured in the policy. This applies to both parties and ensures that property and assets are covered in the event of an accident or injury at the site. If a contractor refuses to provide proof of insurance or refuses to include you in the policy, you should consider this a red flag and an indication that the contractor is uninsured or underinsured. Also ask if any additional or special types of insurance are needed for the job in question. If you`re self-employed or starting a new business, licensing can help you attract the customers you need for your business. Contact your local licensing agency for steps to obtain and maintain a license in your area. Guarantee – The guarantee is the insurance company that issues the bond. When companies refer to themselves as authorized, they usually refer to a state license they hold to perform certain types of work. You`ve probably seen the words authorized, bound and insured in fine print on many ads, flyers and service agency ads.
Whether it`s a bank, builder, general contractor, or law firm, these words indicate that the person or company they describe is trustworthy and responsible. How do you verify a person`s claim to be bound? The company buys a bond, the money that is set aside, from a guarantee company because the state requires it. The company that buys the bond is called the principal, the surety is the surety company that guarantees the bond with a line of credit, and the creditor is the government (or the entity that requires it).