All contractors, irrespective of their field of duty, have one thing in common: they are in a risky industry and need to secure themselves, their employees, tools of trade and businesses in general. Insurance for contractors offers protection  from all kinds of dangers that can leave their companies bankrupt.

There are various kinds of insurance policies suitable for contractors in need of protecting their business from claims related to general liability, and equipment and tools failure.

Due to financial constraints, contractors are not able to pay for all insurances they would need in their line of duty. However, a professional contractor should at least have these three forms of contractors insurance.

1. General Liability Insurance

This is a package that provides cover for customer injuries and customer property damage, including lawsuits related to both. This insurance package is a necessity for contractors because of the following reasons:

It Protects Contractors and their Businesses – The general liability insurance protects the contractors from paying legal fees resulting from a lawsuit. A client may sue a contractor for injuries, damages or poor workmanship.

Read more about General liability insurance and builder’s risk coverage at:

Clients Request for it – Most clients require a contractor to at least have this insurance package before they can allow them into their projects. Clients are cautious to have to battle with contractors in courts in case of accidents or uncompleted projects.

It’s a Law Requirement – The law often requires contractors and clients to have insurance policies before construction work commences. This is to ensure accidental injuries and damages will be taken care of.

2. Workers’ Compensation Insurance

This is suitable for employees in the construction industries as they have a high risk of injuries or loss of lives. The cover caters for employees’ medical bills, partially missed wages, and recovery costs. In the worst cases where an employee dies in the line of duty, the cover caters for funeral expenses and compensates the immediate family of the deceased.

In most countries, the law requires companies to get this cover immediately they get their first employee. The premiums paid for these covers cannot be compared to the loss a company would undergo if they have to pay for medical bills, compensate the employee as they recover and/or pay for funeral expenses and compensations.

3. Errors and Omissions Insurance

This is an insurance package that is commonly referred to as professional liability insurance (PLI). It compensates a client for damages resulting from professional mistakes while working on a project.

Professional contractors can make errors either due to negligence, equipment failure or other natural courses. A client is compensated for the damages made without the company digging into its pockets to pay for the same. However, the companies must have spent all their premiums for the injured to receive compensation.

In construction work, accidents occur, whether they are human-made or due to natural causes. Insurance policies exist to protect both companies from the struggles they can face if sued or when they need to compensate a client, employee or a third party.

If you are looking to place a bid on a certain project, it is no wonder you might wish to look at contractor bond.

Why Obtain a Contractor Bond?

Getting a contractor bond is essential because it both protects the contractor and the person performing the work, and the party or person who wish to get the job done. California Contractor License Bond & Insurance Services is a leading company offering competitive rates on all form of contractor bonds and general liability coverage. This type of insurance could go a long way to obtaining and keeping everybody happy and satisfied with what’s being done. A contractor bond is one which guarantees the public that a particular company is going to follow laws, as well as safety regulations when carrying a job.

Where To Get These Bonds

Being involved with contractor bonds has not been easy. As soon as the licensing bonds are acquired, there might be a need for you to further the firm’s knowledge of other bonds. Now, this can be as easy as doing some internet searches and also spend time on the internet doing sure learning. Discovering which bonds might be most appropriate for the type of contract, or work can start with obtaining a few easy questions answered concerning what the project is and what it entitles. Take some moment to research to find out the bonds are appropriate for the job the company is performing.

Various Types Of Bonds

Now, the bid bond is first gotten. This type of bond protects the owner of the job from the contractor who fails to do the job he/she bid on. This permits a level of trust and comfort between both the project owner and the contractor. This first bond will pave the way for your next two. Now, if a contractor can not give the other two (2) bonds, there are chances that they won’t give a bid bond.

Your payment bond is to provide assurance the contractor will pay for and is also responsible for any supplies, employees, and subcontractors. Also, this bond keeps the owner of the project from becoming accountable for any debts or credit incurred from that job.

The performance bond gives more protection for your project owner. It’s an agreement that is time sensitive, ensuring the job is done by a specific date. This will protect against delays in weather and other different problems. It is essential in jobs for dormitories, college buildings, and apartment buildings.

Another common bond required is the California LLC Employee Worker Bond, which requires a limit of $100,000.

These bonds are the start of some contractors being involved with projects and jobs. It’s essential for you to not to overlook the available options to a company for certain protecting their customers. Not only does it assist to keep the entire pressure and stress from falling just on the shoulders of the contractor, it aides in offering confidence to those hiring the company.

Yes, Even Small Contractors Need to be Bonded

A contractor bond is an essential coverage for businesses. Aside from being a requirement in many states in the US these coverage provide a reliable safety net for firms, especially those that offer general contractor services. Both large and small contractors need to be bonded to protect and uphold your business’ sustainability.

The Usefulness of bonds

A Contractor’s Bond is not a requirement in every state for every contractor’s dealings, but this coverage provides added financial backing for any unplanned circumstances that can occur during or after a project.  Much like insurance, a bond also boosts a general contractor’s chance of obtaining the major and even the minor projects. But for the case of many developed states though, being bonded is an absolute requirement before being allowed to bid on projects or independently offer services to clients.  Here is a closer look at construction bonds.

Forms of Bonds

Contract bonds, known as “Surety Bonds,” come in different forms and each provides for particular circumstances.

1. Bid bond. This, in particular, ensures that upon acceptance of a specific bid by a customer, the Contractor will eventually proceed with that contract and will immediately replace the bid bond with a performance bond. Otherwise, the Bonding Company pays a customer the deviation on contractor’s bid and a next highest bidder.

2. Performance bond. This serves as a commitment by bonding company to settle payments when the order is complete.

3. Payment bond. This bond ensures that the Contractor will pay materials from suppliers and services provided by Subcontractors.

4. Maintenance bond. This bond functions much like warranty wherein the Contractor pledges to deliver therapeutic and upkeep services for a specified period.

Facts to keep In Mind

While this information is reassuring, there is still some additional information about bonds. All bonds include bond premiums as part of market competition and risk. Depending on the type of bond you seek, the percentages can range anywhere from 1% to 20%, and they could include a minimum charge or even be set to a graduated rate. Don’t forget that bonding rates can also vary according to the applicant’s credit.

The time required to get a bond can range, depending again on the type of bond, from anywhere to same day, to a few days, to a week or more. Bond duration also varies according to type and can be from 1-3 years, the duration of a project, or a court-appointed time span. So whatever type of bond you choose, make sure to do your research, so you get the right bond for the right service for the right amount of time, and with the right amount of coverage. With a bond like this, you have the research and guarantee of the surety to minimize your risk.

Only Hire Bonded and Insured Contractors

Do you want to hire a contractor to carry out some work on your property or home? Are you aware that you can be safeguarded from contractors if something goes wrong? If you are planning to hire a contractor for your home improvement project, then you need to ensure that he is insured and bonded. Hiring a contractor who is not bonded and insured is risky as you will not get any compensation in case something wrong happens during your contract.

Differences between Contractors Bond and Contractors Insurance

A contractor’s bond protects the client in case the contractor does not finish his job as agreed like failing to pay subcontractors or not paying licenses on time. This gives you the surety that you will not lose money or your property to be damaged during the contract. The bond guarantees you that the contractor will perform the contract as agreed or else he will lose his money for doing a shoddy job.

Contractor insurance covers the damages that might have been caused to your property or offers compensation to workers who are injured while executing your contract.

Reasons why you should only hire insured and bonded contractors only

There following advantages can be enjoyed when hiring bonded and insured contractors as opposed to the ones that are not insured as discussed below;

  • A bonded and insured contractor has all required building permits and this assures you that your project will meet all the safety and building codes. He ensures that your project meets all the professional standards.
  • The contractor may be fined or get censured by contractor’s board if he fails to perform the work as you had agreed in the contract
  • Bonded contractors add value to your home when you want to sell it. This is because most lenders will look for the permit of the contractor who renovated it before approving the funds.
  • Having an insured and bonded contractor for your project helps you to avoid unnecessary liabilities like innocent accidents or unsafe procedures used by workers that may lead to injuries.
  • It helps you to recover your funds in case your contractor neglects your project or if he dies.


If you want to avoid the risks and stress involved with hiring uninsured contractor, then you need to hire a contractor who has good credentials of his trade. Hiring a bonded and insured contractor will ensure that your project runs smoothly and is completed within the agreed time.