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Question DetailsAsked on 8/12/2014

Difference between terms "bonded" and insured" for hiring contractors working at house?

When choosing companies to work on property, such as cutting down tree limbs or contractors to work in the home, I see the terms "bonded" and "insured," and I know that ideally we should choose both. But in practice they usually seem to say they are not bonded but they are insured. What is the difference? .Does "bonded" simply mean that if we have a claim against the worker, damage would be covered, and insured means if worker has a claim against the house owner, that term would apply? Or vice versa or what?

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Here is a link to AL article on that issue -


http://www.angieslist.com/contractor/...


Also links to a couple of prior questions with responses can be found right below this answer.


Generally, in simple terms, bonding is a guarantee of sorts by a bonding/insurance company that if the contractor fails to perform the job in a workmanlike manner or fails to complete the job, they will make good on it according to the terms of the bond.


Insurance protects against damages or injury in the course of the work - worker's comp protects his workers, and if they make a workers comp claim then you are generally, in most states, protected against them suing you. However, in many states, workers who are injured are able to refuse to take worker's comp coverage and then sue the contractor and/or you for damages. Of course, that is a lot less sure a thing than worker's comp, so that commonly only occurs on commercial jobs or work at ritzy properties where they figure they can get a better settlement than Worker's Comp would give them, and by suing they generally lose any possibility for worker's comp coverage for the injury.


His general/liability insurance covers primarily against damage/injury to others by his operations - say they hit someone with equipment or falling materials, damage your house (other than in the normal course of the contract work), etc. The insurance does NOT generally protect you against what he does in the normal course of the job or workmanship - it is basically "accident" insurance, and if you are an additional named insured on the policy during the course of the work, it protects you as well against claims because of damage/injury caused by him, up to the limits of the policy.


Generally, you want all three types of coverage (plus auto coverage on his vehicles). Obviously, on a major remodel the "completion of the job" protection provided by a bond is critical - on something like say cutting up a dead tree or mowing your alwn it give protection against him taking your money and skipping with it, but as far as job completion probably not nearly as important as the liability insurances, as basically if he fails to complete the work it is not tough or particularly more expensive to hire someone else to do it like it would be if a remodel were left hanging as a mess.

Answered 5 years ago by LCD




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