Differences Between Contractor Bonding & Insurance

If you are planning to remodel your home or have remodeled in the past, chances are you’ve heard mention of bonding and insurance from your prospective home improvement contractors. But what do these terms mean, and are they different from each other? More importantly, are they necessary?

Defining the Contractor License Bond

The licensing process that a contractor goes through has multiple requirements, one of which is to obtain a license bond. A contractor license bond protects the company’s clients and the general public. This bond, which is an agreement between the contractor, the state licensing board and a surety company, ensures that the contractor operates within the limits of state and federal law as well as local building regulations.

General contractors, including home, kitchen and bathroom remodel contractors, are also obligated to give due payment to their employees and subcontractors. Bonded contractors are required to provide compensation for any damage caused by their negligence or malpractice.

Two Types of Insurance

There are two common types of construction-related insurance: workers’ compensation and liability insurance. The former protects the contractor’s workers and ensures that they receive proper compensation and benefits such as medical care in the event they suffer injury on the job. Liability insurance, on the other hand, protects the employer against undue or malicious claims or lawsuits due to injuries or damage sustained on the job site.

The bottom line is that contractors need both bonding and insurance to ensure a safe and satisfactory contract between all parties involved.

Start a Conversation With DreamMaker Bath & Kitchen

Here at DreamMaker Bath & Kitchen of Aiken, we make sure that everyone, from our subcontractors and employees down to our clients, are well taken care of. Give us a call today at (803) 335-1758 to schedule an appointment and start a conversation about your next remodeling project.

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