Consumers are often told to ensure the contractors they hire are insured and bonded. This means that those contractors who have taken the extra steps to obtain surety bonds and insurance will have a greater chance of getting business. While some consumers might not be too worried about things like bonds, most are. If you have just started your own contracting service, do not skip those surety bonds, even if they seem expensive.
They Make You Look Like a Better Risk
Surety bonds pay out if you don't complete your job. In other words, if you agree to do some work for a customer and you do not complete it either because the weather was too bad, there was a supply shortage, or you plain skipped out, the customer can get compensation from the surety bond company. This is so that he or she has the money to get another contractor to fix the problem.
If you are bonded and can provide the customer with your surety bond information, then you look like a better risk. Having that bond says to the customer that you are confident that you will finish the job correctly and on time, or with only reasonable delays. After all, why would you spend the money on a surety bond and spend time proving you qualify if you're not planning to complete a great job?
If you don't get bonded, then that looks suspicious. It looks like you can't get bonded (and if you really are having trouble getting bonded, keep trying, because there are companies that will work with you) or like you just want to take off at any time and not finish the work.
Your Insurance Isn't Enough
Your regular commercial insurance coverage isn't going to be enough. The insurance you have covers damage that your workers cause. For example, if you're painting the interior of a house, and your worker puts a hole through the drywall, your insurance will pay the homeowner for the necessary repairs to the drywall. Your insurance will not pay out if you and your workers abandon the job. That's what the surety bond is for.
Sometimes you may see surety bonds called bond insurance. That's still a surety bond and not normal commercial insurance.
Get started on your bonding process now so that you can advertise your bonded status to customers soon. It shouldn't take long, and it will help you now and in the future. Contact a bonding company for more information and assistance.