Brier Grieves May 9, 2016 No Comments

What Does It Mean to be Bonded and Insured?

When a person or company is marketing themselves and their services, many will promote themselves as “bonded and insured.” However, many consumers are often unsure what this actually means. We all seem to know this is important, but why? What does it mean to be bonded and insured?

Those who are not bonded and insured are often cheaper. However, did you know using these individuals and companies means you are accepting all the liability if something goes wrong? That is right. You are on the hook for everything from property damage to an injured worker.

The main distinction between bonds and liability insurance is who becomes financially restored in case of a claim. In basic terms, insurance protects the company or individual doing the work from loss, and a bond protects those having the work done if there is a failure to fulfill obligations.

If a contractor has equipment damages or worker injuries, an insurance policy makes sure they are compensated for that cost. There are only two parties involved: the insured and the insurer. On the other hand, a bond protects those in which an obligation is owed (the obligee) if the company providing the work or service (the obligor or principal) causes them a loss. Imagine along the lines of a contractor causing damage to one’s home, worker theft, or a failure to complete work.

Bonded

  • A contract that guarantees the bonding company will pay the obligee if the principal (i.e. the contractor) does not meet their obligations.
  • A bond protects the consumer.
  • A bond’s premium guarantees the principal fulfills their obligation.
  • Bonds are issued to individuals or companies whose projects requires a guarantee.
  • Bonds are a form of credit and the principal is ultimately responsible for repaying the claim.

Being bonded means a bonding company will protect the consumer if they have a valid claim against a company. These claims can include things like property damage to theft by a company’s workers. If there is an issue, one would file a claim against the company. The bonding company (or surety) will investigate and will pay out using the bond if the claim is valid.

Insured

  • A risk management contract between the insurance company and the insured.
  • The contract (or policy) guarantees the insurance company will compensate the insured if there is a loss.
  • An insurance policy protects the insured.
  • An insurance policy protects from possible losses.
  • The insured does not typically repay the insurance company if there is a claim.

Most of us are more familiar with insurance. If a worker is hurt on the job, or a piece of equipment is damaged, the company files a claim for the loss. As an example, imagine a remodeling company is installing new siding on your home, and a worker falls off a ladder and gets hurt. If the remodeling company is not insured, a claim is placed on your homeowner insurance policy. If the remodeling company is insured, the claim is on their own policy.

Summary

The phrase “bonded and insured” is something we see all the time from many different kinds of businesses, from contractors to cleaning services. Many of us know that a bonded and insured company is a good thing, but we don’t know why. We hope this article has helped to clear up any misunderstandings.

When a company is bonded and insured, the ultimate benefit goes to the consumer. Being bonded ensures the consumer is made whole if a company does not fulfill their obligations. Insurance insulates the consumer from liability if the company receives a loss while performing work.

The primary difference between the two is who becomes financially restored. Claims on a bond are paid to the consumer to cover their losses. Insurance will pay the company for their losses while performing their work or service. Make sense?

For more information or if you have questions about how to become bonded and insured, please contact us.

Important Questions When Buying a Home

Buying a house is one of the biggest investments you will most likely ever make. You want to pick an area you like, see how the neighbors are, proximity to schools, hospitals and emergency services and so on. We have put together some important questions to ask your realtor and real estate broker before making the final decision.

  • Has the property been on the market for long? This is good to know for negotiation reasons. In most cases the longer the home has been on the market the more willing the sellers will be to negotiate with you.
  • Can you choose your own inspector? It is always better when you can choose your own licensed building inspector. You will get the best results and answers this way.
  • How many similar properties have sold recently? It is good for negotiations and your own knowledge to have an idea of what else has been sold, what the asking price was and what the final selling price was.
  • Are there any major issues? Is the home being sold “as is”? If that is the case the seller is not responsible for repairs. The laws vary from state to state so find out what they need to tell you and what they are responsible for.
  • Is the house in a flood zone? If you are in a flood zone you are required to have flood insurance. Due to recent changes this could be very costly so you want to find out what you are required to do and how much its going to cost.
  • Will the seller assist with costs? In some cases the seller will assist with closing costs or other fees to speed up the selling process. Your broker is not permitted to tell you how much money to offer but you can find out if the seller is flexible when it comes to this department by asking yes/no questions.
  • How motivated are they and have they had previous offers? By finding out how fast they want to sell their home and what other offers they have been given you can get a good idea of what the best offer would be.
  • Status of upgrades: Have all upgrades been done according to code and with the proper permits?

 

Planning a Wedding? You’re Covered!

Wedding season is here. It is a busy time of year and very big business. Brides dream of their perfect day for years, they never think about what could go wrong though. From crazy weather, sickness or injury, issues with vendors, wardrobe malfunctions, just about anything can happen. You can get insurance to protect yourself and this investment in the event of an unexpected hiccup.

Wedding insurance ranges from about $100-$500 depending on the amount of coverage you need. Travelers Insurance recommends that you purchase enough insurance to cover what you would lose in a worst case scenario situation. With the expenses that come with most weddings, this is a small investment to make sure you are safe and not sorry.

The insurance will generally cover the non-refundable deposits and some purchases of for reasons beyond your control the event is cancelled or rescheduled. This is not though in any way shape or form cover if the bride or groom decide to call off the wedding.

 

Remodeling Your Home? Read This First.

This time of year many people start thinking about remodeling their homes and doing some updating. The weather is nicer and its a lot easier. It could also be due to damage caused from inclement weather. Whatever the reasoning may be, it is a popular time of year for this.

The majority of people will hire a general contractor to handle their renovations while some choose to do so themselves. Some homeowners will do portions of the work and hire licensed electricians and plumbers for that work.

No matter how you go about this, remember: The homeowner, the general contractor and all subcontractors need to have proper insurance coverage.

The first thing you want to do is review your homeowners insurance policy. You want to be sure that your policy covers your home and property during the time it is being remodeled. You may have to move furniture out of the house. A lot of times people will rent a container and store this on their property. Make sure that when doing so the contents are covered. You may need to get an additional policy for that period of time depending on your coverage.

You want to contact your broker if you are doing the work yourself to insure you are not voiding your policy. Some homeowners insurance policies do not cover work done unless it is by a licensed and bonded professional. Due to the amount of variables that exist when it comes to insurance, especially for remodeling projects, you want to be sure that you have crossed every “t” and dotted every “i”.

That being said. If you decide to hire a contractor, make sure they are licensed and bonded with a surety bond before you sign a contract. This protects you in the event they cannot finish the job. Under your contract there should be an agreement that all of the work will be done according to current building codes and all of the proper permits will be obtained.

The general contractor is responsible for property damage, on the job injuries and negligence in workmanship. All of this should be covered by their general liability and worker’s compensation insurance. Confirm their coverage with their insurance company and ask them for documentation and proof of all certifications with dates to insure that this will be in effect during the time period the work is being done.

Purchase a builder’s risk policy. Building materials and equipment belonging to the contractor or subcontractor are not protected in the event of theft by your homeowners insurance policy. Consult your broker about whether or not this is something you want to invest in during the construction period to protect yourself and the contractors. The general liability policy your general contractor should have will most likely cover damage to your existing property, but not to any new work they do, or additions made. They are only liable for damage to the old home, not the new additions. By having a builders risk policy you will be protecting your home addition as well as the tools and equipment of the contractor.

 

 

 

 

 

Flood Insurance Changes as of April 1, 2015

There are cost changes coming into effect on April 1, 2015 to flood insurance. For some this will result in lower rates and more affordable insurance, for others though, the cost will be going up. The Federal Emergency Management Agency (FEMA) will be implementing more changes to the National Flood Insurance Program (NFIP) as directed by the Homeowner Flood Insurance Affordability Act of 2014 (HFIAA) and Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters).

Older homes that are not your primary residence are going to be subjected to the highest increase. The lower, subsidized rates that previously applied to these properties are being phased out and homeowners will be looking at a cost in crease of 25% plus a surcharge. The changes will also bring lower initial rates for properties that are now considered high risk due to changes in FEMA flood maps. This will last for 12 months after the changes to the maps are made and then will gradually increase to reach their full risk rate.

Some of the important Flood Insurance changes take effect in April as the result of the Homeowner Flood Insurance Affordability Act (HFIAA) and the Biggert-Waters Flood Insurance Reform Act of 2012 (Biggert-Waters):

  • Implementation of the annual surcharges that are required by the are HFIAA
  • Increasing the reserve fund assessments required by Biggert-Waters
  • Guidance on substantially damaged and substantially improved structures and additions rating guidance on Pre-Flood Insurance Rate Map (FIRM) structures
  • Implementation of the annual surcharges required by HFIAA
  • New deductible options
  • Implementation of a new procedure for Properties Newly Mapped into the Special Flood Hazard Area and existing Preferred Risk Policy Eligibility Extension (PRP) policies
  • Implementation of the first annual rate change that sets rates using rate increase limitations set by HFIAA, for individual premiums and rate classes

Federal Policy Fee (FPF) Changes

Make sure you complete and return the residency forms from your insurance company/agent, as your responses (or lack thereof) will impact your renewal rate.

If you have any questions about your current policy and what changes you may incur please call us at 813.876.4166 and one of our specialists will be on the line to help you.

To learn more about Flood Insurance you can read in detail at I Got Dropped.