Contractors often carry several types of coverage, including surety bonds. This is what most companies refer to when they say they are bonded and insured. Understanding how bonds work is important for both Tucson, AZ, business owners and consumers.
What Is a Bond?
A surety bond is a financial guarantee that the contractor will complete the agreed-upon work. The contractor purchases the bond to instill customer confidence in its reliability. If the contractor fails to meet their obligations, the bond can cover the customer’s financial loss.
The contractor must repay the bond issuer if a payout is made. However, bonds do not typically cover property damage. Agents at The Insurance House can help you learn more about how bonds work and what they protect.
General Liability
General liability insurance provides coverage if a contractor damages a customer’s property. This protection does not come from the bond. If damage occurs, the contractor would file a claim through their liability insurance, and the policy would usually pay for repairs. If a customer sues the contractor, liability insurance may also help cover settlement costs.
Legal Requirements
Contractors in Tucson, AZ, must obtain a surety bond to obtain a license. They must also carry a valid contractor’s license before performing work. Bond requirements vary based on the type of work the contractor performs and the business’s projected income.
Agents at The Insurance House can help you understand how surety bonds work and what other types of coverage contractors may need. Contact us today. We proudly serve the Tucson, AZ, area.
