What does it Mean to Be Licensed, Bonded & Insured?

When researching different commercial glass companies, you may have come across the phrase “licensed, bonded, and insured”. Do you know what that means or why it is important? Here we’ll define each term, and talk about the different types and why they are important to you as a customer. 

What Does it Mean to Be Licensed?

Just like you are legally required to have a driver's license to drive and operate a car, businesses are also legally required to have a business, contractors, or another state-issued license to conduct business. So, when a business states that they are licensed, it simply means that they hold a state-issued license(s) to perform certain types of work. Typically, commercial glass companies will hold a business license and a contractor's license. Depending on the state, each has its requirements, such as Idaho requires a Public Works License to do work on any government jobs, which is why Gordon’s Glass also has an Idaho Public Works License in addition to their Utah and Idaho contractor licenses. 

What Does Bonded Mean? 

When you hear or read the phrase “licensed, bonded, and insured”, most people typically have an idea of what licensed and insured means, but bonded can be a bit murky. Just stating that a business is bonded doesn’t say much, as there is a multitude of different types of bonds, nor does it state the specific amount of the financial guarantee. Generally speaking, when a company states that they are licensed, bonded, and insured, they are stating that they have purchased some type of surety bond. In other words, a surety bond is a financial guarantee that the surety (insurance company issuing the bond) will pay the obligee (organization requiring the bond) on behalf of the principal (bonded company) if the principal is unable to meet their financial/debt obligation. 

While this may sound like insurance, there is one major difference between the two. Unlike insurance, if the bond company pays out a claim on the commercial glass company's behalf, they will require the company to repay them for the claim. 

As mentioned above, there are many different types of bonds available, which are generally broken down into two main categories: contract surety bonds and commercial surety bonds. 

Contract Surety Bonds

These bonds are written for a specific construction project and are usually provided as an assurance to the specific project’s owner that the company will fulfill their obligation as outlined in their contract even if they are insolvent or go out of business before completion. Within the realm of contract surety bonds, there are four specific types: 

• Bid Bond: provides financial protection to the project owner if the contractor wins the bid, but is then unable to or does not sign the final contract. 
• Performance Bond: a performance bond guarantees the project owner that if the contractor defaults, the surety will complete the project on their behalf. 
• Payment Bond: this type of bond guarantees that all subcontractors, vendors, and suppliers who work or supply materials on the construction project will get paid. 
• Warranty Bond (maintenance bond): this ensures that any workmanship or product defects found with the original construction will be repaired during the duration of the warranty period. 

Commercial Surety Bonds

Under the umbrella of commercial surety bonds, there are four sub-categories of bonds that are available. 

• License and Permit Bonds: a license bond is a financial guarantee that the policyholder will fully comply with all laws, rules, and regulations that are required of them to perform. 

• Court or Judicial Bonds: court, judicial, appeal, supersedeas, attachment, and injunction bonds are all types of surety bonds that ensure the fulfillment of a court-appointed task. 

• Fiduciary or Probate Bonds: Similar to a court or judicial bond, a fiduciary or probate bond fulfilling a court-appointed task, a fiduciary or probate bond usually deals with the handling or management of other people’s money or assets. 
• Miscellaneous Bonds: There are countless other types of commercial surety bonds, that all essentially guarantee that a company will fulfill a certain duty or task that they agreed to fulfill. 

Types of Insurance 

As a general rule, companies are required to have some type of insurance to cover them, their employees, and their customers. This is often referred to as general liability insurance and workers' compensation insurance. 

• General Liability: a commerical glass company's general liability insurance will typically cover the business against property damage or bodily injury they cause to others (i.e., customers or subcontractors), during their business operations. 
• Workers Compensation: If a company has employees, most states have laws that require the company to carry some type of workers' compensation insurance. This specific insurance policy will cover things such as medical bills and lost wages due to a work-related injury. 

As you can see, you must find a commercial glass company that is licensed, bonded, and insured so that you have peace of mind knowing you and they are both protected. If you are looking for a reputable licensed, bonded, and insured commercial glass company in Logan, Utah, and surrounding areas, look no further than Gordon’s Glass. With an extensive resume of successful commercial projects under their belt, Gordon’s Glass can help you with any commercial glass project you have.