All About Licensure, Insurance, and Being Bonded for Contractors

Are you a relatively new home owner who is looking to have some work done on his fixtures, or is looking to have repairs done for his home? If so, it would be wise if you first educate yourself about the terms “insured” and “bonded”. Both terms are key to ensuring that you are going to get the service that you pay for, and will be compensated should inconveniences arise resulting to the work of the contractor you hired. Basically, you must make sure that you hire people who have these terms to go with their name. This will give you assurance that a contractor you hire, like a plumber for instance, has taken all the necessary steps he is required to in order to gain licensure. This is because there is a certain process that any contractor has to go through in order for them to gain licensure, and part of this process is to get insured and bonded. These two are different types of coverage, and they are both designed to protect the clients or those who hire the services of contractors such as plumbers.

Being licensed

Being licensed, for a contractor, means that he or she has legal permission to operate in a given state in his/her field of expertise. This license is different for every state, so if a plumber wants to work in two different states such as New Jersey and Pennsylvania, he/she will have to obtain licensure in the two different states. The examinations and certifications that are needed for them to successfully get their license to operate are all designed to make sure that the clients who hire these contractors are well protected, since licensed contractors will have to abide to a certain code of ethics, as well as be with liability insurance and would be bound by workers compensation laws.

Being bonded

Being bonded generally means that a certain project by certain contractor or company is protected. This protection is for the hiring party, as they will be protected against the unlikely event that a certain contractor fails to finish his or their job. If this happens, the hiring party can claim compensations from the contractor’s surety company who is in charge of the bond. This gives clients financial protection from the inconveniences that they could be left with should their contractor decide to abandon ship or skip town without finishing his job first. This is so that the client can easily get a replacement and have the job finished by a different contractor.

Similarly, liability insurance is also for the client’s protection. It however differs from bonds in the coverage it provides. Liability insurance provides overall protection for employees and materials, and is not just specific for jobs. In the event that damages occur due to the negligence of contractors, they will be held liable for the said damage, and their liability insurance holder will provide for the necessary compensation for the said damages. 

In most municipalities, if a contractor wishes to work on a public structure, he or she must first be bonded. Nearly all types of businesses have some sort of liability insurance for protection against any unwanted occurrences which they could be held liable for. For some companies, having individual insurance bonds is required of their employees all throughout their time with the company. They also use this as some sort of filtering requirement for all the applicants in their company, since the licensure and bonding process checks the applicants’ background and criminal records, thus making it harder for malicious individuals to obtain such requirements.

For master plumbers, it is important to have a contractor license bond for Burlington County if you are looking to work there, especially if you have your eyes set on public works. Most, if not all, of the highest paying projects require contractors to have bond insurance in Camden County, as they are most likely going to be municipal projects. One of the requirements in a master plumber bond in New Jersey is that the holder or owner reviews and renews his or her license every two years. If the plumber cannot agree to this, the bond company for plumbers in New Jersey won’t grant him or her his bond application. On the other hand, companies are often equipped with their own kind of policy, such as a BOP in Gloucester, especially if they are working with the public. This is, after all, a wise business move, as this ensures the assets of businesses against unfortunate events.