Sounds Familiar, But Many Don’t Know The True Meaning
People have asked us many times, “What does it mean when a contractor is ‘bonded’?” We’ve all seen it on work trucks, business cards and advertisements: “Licensed, Insured and Bonded.”
The first two are pretty simple — we know any business must purchase licenses from state and local governments, and insurance against catastrophes on the job.
At first glance, it may seem licensing and insurance should cover just about everything. If your contractor has a license, you might infer they have all of their required training, pay their taxes and are doing business legally. If your contractor carries insurance, you might infer this would cover any injury, accidental damage or loss to you or your property — or your neighbors’ properties — during construction. The good news is, you’re probably correct.
So, Why Must My Contactor Be Bonded?
But what if the contractor has finished the job, you’ve paid them, they’ve paid for their licensing and taxes, and everything looked great…until a few months later, when you notice your new deck is sinking?
The word “bond’ typically refers to a surety bond. You can think of the bond as a sort of insurance policy against shoddy workmanship. Liability insurance protects against damage the contractor may cause during the course of construction. A surety bond provides protection against work performed in violation of the building code.
If it turns out your contractor failed to install the footers on that deck to the depth required by code, either they return to correct the violations or the company issuing the surety bond pays another contractor to remedy the issue.
This, of course, is a simplified explanation of what a bond is and why your contractor should have one. Bonds and other contractor requirements vary widely, not just from one state to another, but also based on county and municipality.
In New Castle County, Delaware, where Martin & Calloway operate, a business must be licensed with the state and the county. New Castle County requires both proof of liability insurance and a surety bond in order for a contractor to obtain a license. We always recommend you verify license, bond and insurance are in place, and contact customer references before hiring any contractor.
Hang in there through the remaining cold months, friends! As always, we’re happy to answer any of your questions, on this topic or any other. Feel free to comment on this post or send us an email!