How to Bond & Insure Your Small Business

Before you can operate a small business or get a professional license, you may need to get bonded and insured. Learn what being bonded and insured means and how it can benefit your new business in this guide. 

What Does Being Bonded and Insured Mean?

Being bonded and insured as a small business means you have insurance coverage and an active surety bond policy to cover the business and its clients from financial harm.

Surety Bonds vs Insurance Coverage

Surety bonds are often mistaken for business insurance. However, they’re more like a form of credit that protects your customers rather than your business. 

• Small Business Insurance: Protects the business from property damages, accidents, theft and other unforeseen circumstances. 
• Small Business Bond: Covers customers from financial loss due to risks such as unlawful conduct, breaches of contracts, employee theft and fraud. 

Types of Small Business Surety Bonds

There are many types of surety bonds that help ensure the credibility of startups and small businesses. Here are four of the most common small business and start-up bond categories:

• License and Permit Bonds: Allow small business owners to become legally licensed in their industry and local jurisdiction.  
• Commercial Bonds: Enable small businesses and service providers to legally operate within a state and meet contractual obligations. 
• Contract Bonds: Ensure businesses or construction professionals will meet contractual terms and complete satisfactory work. 
• Business Service Bonds: Protect service-based small business clients from financial loss due to employee theft of customer property. 

Types of Small Business Insurance Coverage 

Here are the four most common types of small business insurance: 

• General Liability Insurance: Covers basic expenses including property damage and slip-and-fall injuries. 
• Commercial Property Insurance: Covers damage to rented or owned commercial spaces as well as equipment, furniture, fixtures and supplies. 
• Worker’s Compensation Insurance: Covers medical bills and disability benefits for employee work-related injuries. 
• Commercial Auto Insurance: Covers damage and accident-related medical bills involving commercial vehicles. 

Why Should Small Businesses Get Bonded and Insured? 

Bonding and insuring your small business is often mandatory to legally operate. However, there are additional benefits of being bonded and insured:

• Attract New Customers: Bonds instill consumer trust that small businesses will act ethically. Advertising your bonded and insured status increases client confidence and builds credibility. 
• Create Business Opportunities: Surety bonds allow your business to qualify for larger projects. For example, commercial cleaning companies and construction contractors almost always need a bond to win large contract bids. 

What Types of Businesses Get Bonded?

Various licensed professionals, permit holders, dealers and agencies must be bonded by law. Many small businesses that work in client homes or workplaces are also often bonded by choice. 

Here are some common examples of business that get bonded: 

• On-Premise Service Providers
• Health Spas and Studios 
• Home Health Care Agencies
• Lawn Care Providers 
• Housekeepers
• Mortgage Brokers
• Public Notaries 
• Real Estate Brokers 
• Security Agencies
• Tax Preparers 
• Travel Agencies

How Do I Know If My Business Needs to Be Bonded?

Bonding regulations are established by both state and municipal entities. Many industries require bonds for consumer protection and some small business owners buy them by choice. 

To determine if you need to bond your business, research your industry’s laws and check local regulations. If you have questions, reach out to the experts at SuretyBonds.com for help.

Are Surety Bonds More Expensive for New Business Owners?

Since most new businesses do not have an established line of credit, you may pay a higher premium for the initial bond term. However, if you’re a new business owner with a sound financial history you can get a competitive rate with SuretyBonds.com.

How to Get Business Insurance and Bonding 

Get your small business insured and bonded using these five steps: 

1. Research: Contact the local government agency regulating your industry to determine your surety bond and insurance needs. 
2. Get Insured: Purchase insurance coverage from a trusted provider. 
3. Find a Surety Provider: Find an agency and apply for a small business bond quote. 
4. Get Bonded: Purchase your bond and file it with the obligee (agency requiring the bond). 
5. Renew: Renew your bond coverage as needed and maintain an active insurance policy.

Get Your Small Business Bond Quickly & Easily 

SuretyBonds.com is the nation’s leading surety provider. Work with us to experience the fastest and easiest bonding process in the industry. Buy your bond instantly online or apply to receive a free quote within one business day for select bonds.