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If you have never had to obtain a surety bond and you’ve been told you need to get ‘bonded,’ you may wonder what this means. You may also have heard that being bonded is a bit like insurance, but not quite. So what does “getting bonded” mean?
Being Bonded vs. Being Insured
Being bonded means to have obtained a surety bond, which is required of you by the government (if you are getting licensed), by a construction project owner (if you are a contractor), or by a court (if you are a fiduciary or are appealing a ruling).
In other words, a surety bond is like an agreement between you (the bond principal), the government, the public, the project owner, the court (the bond obligee), and the surety bond company which issues the bond.
By obtaining a surety bond you are effectively providing protection and a financial guarantee to the bond’s obligees. The surety bond company guarantees that you are bonded, and that if you should cause any financial harm to the obligees, the surety will compensate them up to the full amount of the surety bond. As the bond’s principal you must then compensate the surety for its coverage of a bond claim.
Being bonded is more like having a line of credit extended to you as the principal, rather than insurance. Alternatively, you could say it is like getting insurance for your clients.
In certain instances, being bonded may be similar to having insurance. This is the case with fidelity bonds, which are like insurance for you against employee theft, fraud, dishonesty, embezzlement or other transgressions. However, fidelity bonds are the exception, not the rule. The general rule is that your surety bond provides protection to your clients and customers.
If you would like to find out more about how surety bonds work, our What is a Surety Bond page has everything you need to know.
For more information about the difference between surety bonds and insurance, check out our Surety bond vs. Insurance page.
What Does ‘Licensed and Bonded’ Mean?
Being licensed and bonded is a requirement for all businesses and professionals who need to apply for a business license and obtain a license bond, before they can legally perform work.
Whether you need to obtain a license bond when you are applying for your business license depends on the state where you work, and the regulations in place there. If you are an auto dealer or a freight or mortgage broker for example, you must obtain the relevant bond before you are granted a license.
Contractors who wish to work on a construction project, typically also need to be licensed and bonded before they can commence work. In most states, if a contractor is licensed, this automatically means he or she is also bonded and has supplied a contractor license bond during the license application process.
How to Get Bonded
When you get bonded, you will be asked to submit a surety bond application form. This form includes a number of fields which you will need to fill in. You will be requested to share some basic personal and obligee information, as well as financial information such as your personal credit score.
When you get bonded, you will be asked to submit a surety bond application form. This form includes a number of fields which you will need to fill in. You will be requested to share some basic personal and obligee information, as well as financial information such as your personal credit score.
To get bonded, apply online here and submit your surety bond application. If you have any additional questions about getting bonded, or need help with your application, just call Bryant Surety Bonds’ professionals at 866.450.3412. We will be happy to assist you!
If you want to read more about how you can get bonded, visit our How to Get Bonded page, where you can find further details about the bonding process and requirements.
Frequently Asked Questions
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