If you own or operate a contracting business, such as painting, plumbing, landscaping or construction, you may have heard some of your competitors say they are “bonded” and “insured”. If you are not sure what the difference is, this article will discuss some of the distinctions between New Jersey surety bonds and liability insurance.
Sometimes surety bonds are mistaken for being the same as liability insurance, however they are not the same thing. In the case of insurance, you pay a company a monthly premium to cover damages in the event of a disaster or a problem that occurs while you are working on a project.
New Jersey surety bonds are essentially a guarantee to your client that the job they hire you to do will get done. If anything happens in the middle of a job and you are unable to complete the project, the customer could take you to court. With a surety bond, the bond issuing company sets aside the amount of money that would be required to complete the job, so if the contractor walks away in the middle of a project for whatever reason, the client can use that bond money to have someone else finish the job. Not many companies will issue surety bonds to a contractor who makes a habit of walking out on projects, so having the surety bond is also a way to show your clients that you are reliable and will do the job they hire you to complete.
Having both liability insurance and New Jersey surety bonds is a great way to show your clients that there is very little risk in doing business with you. Being bonded and insured can be a mark of excellence for your business.