General Contractor: What Does it Mean to Be Bonded and Insured?

If you're on the hunt for a general contractor, you're probably going to come across the phrase "bonded and insured" a time or two in your travels. Companies like to promote this to potential customers as a way to make them feel more comfortable in hiring them. But it can hardly be any comfort if you don't know what it means. Rest assured, it is a good thing. Is it necessary? Read on, to find out what these terms mean to any homeowner thinking about bringing a worker into their home.

Bonded

When a general contractor says they are "bonded", it means that they have posted a surety bond with the CCB, or Construction Contractors Board. This is required by law, so it is only saying that the company has complied with the law. Of course, this says more than you might think. There is no shortage of workers and companies out there stretching the law to their own advantage. When you hire them, you are placing yourself at some risk. Bonding provides another level of security for the homeowner. If the CCB determines that the company owes you damages and the company does not pay, the surety bond will be released to the customer. Of course, the bond is typically so small as to hardly cover the costs owed to the homeowner. In that way, it is often seen as more of an incentive for the company to pay up, lest they lose the bond.

Insurance

Again required by law, a general contractor may claim to be insured to show that they have acquired liability insurance to cover themselves and their workers on the job. This is very important. As a homeowner, you cannot afford to be held liable for a worker's injury or death while on your property. While liability insurance does not protect the homeowner from lawsuits resulting from negligence, it will protect the homeowner if a worker is injured due to the job itself. The insurance will not play a role in reimbursing an unsatisfied customer for shoddy work or home damage.

Together

When combined, these two legal concepts are things you want to see when you hire a general contractor. Not just because of their separate merits, but because the law in fact requires them. When you hire a company that is working outside the confines of the law, you are taking a big risk. You could be entering the world of scam artists and con men, which is something you certainly don't want. Of course, bonds and insurance provide a certain level of security to the customer on their own.