This blog is a guest post from Sara Aisenberg of SuretyBonds.com. In September, Sara shared a post about how being bonded pertains to the painting industry.
Breaking down “Bonded and Insured,” Part 2
Most service professionals are familiar with the phrase “bonded and insured,” but not everyone knows what the terms mean and how they pertain to their professions. In the second part of this two-part series, we’ll dissect the term “insured” and see how it differs from being bonded and how it pertains to the painting industry.
What does “insured” mean?
Insurance is different than a surety bond because of the coverage it supplies.
Merriam-Webster dictionary defines “insurance” as “an agreement in which a person makes regular payments to a company and the company promises to pay money if the person is injured or dies, or to pay money equal to the value of something (such as a house or a car) if it is damaged, lost, or stolen.”
Insurance covers anything that might happen while a company is providing a service. Different types of insurance – like property insurance, liability insurance or worker’s compensation insurance – will cover the company if an accident were to occur on the jobsite. For example, if an insured contractor falls off a ladder while painting a house and hurts himself, the claim will be filed against his company’s insurance rather than the homeowner’s insurance.
Who needs insurance?
Professionals in countless industries are required to be insured.
All businesses that hire employees are required to have two key insurance types: workers’ compensation insurance and unemployment insurance tax. Workers’ compensation insurance covers wage replacement and medical benefits for employees injured on the job. Under certain conditions, some businesses are required to pay an unemployment insurance tax. If your business must pay the unemployment insurance tax, you will have to register your business with your state’s workforce agency.
In California, Hawaii, New Jersey, New York, Rhode Island and Puerto Rico, employers are also required to have disability insurance. Disability insurance provides partial wage replacement to employees that are unable to work because of a non-industrial injury, pregnancy-related condition or illness. Although disability insurance is not required in most states, many businesses still purchase it as part of employee benefits.
Contacting your state’s Workers’ Compensation Office, the IRS or your state’s Department of Labor is the easiest way to make sure your business has the insurance it needs. The SBA offers a guide on insurance requirements for employers.
Now that you know what “bonded and insured” means, make sure that contractors and businesses you work with are “bonded and insured” and ask to see documentation. More importantly, make sure that your business is in compliance with the laws of the painting/construction industry and your state. Being bonded and insured is one of the best ways to show potential customers that you mean business.