Many municipalities in Northeast Ohio require Trade Contractors to be registered. While the requirements vary by city, typically the Contractor will need to register with the city and provide it with a Certificate of Insurance that may require it to be named Additional Insured as well as a License/Permit Bond. Read more

A License Bond is a type of Surety Bond which while similar to insurance as a way to transfer risk, is different in several ways:

1. A Surety Bond is a 3-party contract. The Surety (bonding company) guarantees that the Principal (contractor) will perform the tasks contracted for in compliance with all codes and regulations of the municipality. This protects the Obligee (the project owner). The insurance contract is a two-party contact between the Insurance company and the Insured.
2. If there is a loss based on noncompliance of codes or regulations by the Principal (contractor) the Surety will pay the Obligee. However, the Principal must repay the Surety the entire amount of the loss. Not a deductible as discussed in the blog of August 8, 2016.

There are many other types of Surety Bonds you may need as your business grows.

Bid Bonds/Performance Bonds: These financial guarantees typically work hand in hand. Based on the financial stability of your business, a Surety will establish a line of credit letting you bid on projects up to that specific limit. If you are awarded the bond, the Bid Bond will typically become a Performance Bond. This bond guarantees that all contract requirements are met.  If the contractor fails to complete the required job, the bond can provide compensation to the project owner.

Payment Bonds: These bonds ensure all employees and outside contractors brought on the worksite by you and vendors are paid for their services and materials.

To discuss all of your bonding needs contact your Trusted Choice Independent Agent at Richey-Barrett Insurance.