Michael Turner 
To get bonded and insured, first find out which bonds and insurance your state, licence and clients require. Then get quotes from a licensed insurance agent or surety company, choose your coverage, and keep your certificates ready to show customers. Insurance protects your business, while a bond protects your customers by guaranteeing you’ll do the job and follow the rules.
- Insurance pays for your business’s losses. A bond guarantees your obligations to others.
- Many licensed trades, such as contractors, must have a surety bond.
- General liability insurance is the most common starting policy.
- Bond costs are usually a small percentage of the bond amount and depend on your credit.
What does “bonded and insured” mean?
| Insurance | Bond | |
|---|---|---|
| Who it protects | Your business | Your customers or the government |
| What it covers | Accidents, injuries, property damage, lawsuits | Unfinished work, broken rules, employee theft (fidelity bonds) |
| Who repays a claim | The insurer (you pay premiums) | The surety pays first, then you must repay the surety |
Saying you’re “bonded and insured” tells customers you’re professional and that they’re protected if something goes wrong.
Types of bonds for small businesses
- License and permit bonds: required by many states or cities for contractors, auto dealers, mortgage brokers and others.
- Contract bonds: bid, performance and payment bonds for construction and government projects.
- Fidelity bonds: protect clients against theft by your employees. Common for cleaning, home-care and pet-sitting businesses.
Small contractors who have trouble getting bonded can look at the SBA Surety Bond Guarantee Program, which helps small businesses qualify for bonds.
Types of business insurance
- General liability: customer injuries and property damage. This is the most common first policy.
- Professional liability (errors and omissions): mistakes in professional advice or services.
- Business owner’s policy (BOP): bundles general liability and property insurance, often at a lower price.
- Workers’ compensation: required in most states once you have employees.
- Commercial auto: vehicles used for business.
- Cyber insurance: data breaches and online fraud.
The SBA’s insurance guide explains each type in more detail.
How to get bonded: step by step
- Check requirements. Ask your state licensing board or city which bond type and amount you need.
- Find a surety provider. Use a licensed surety company or an insurance agent who handles bonds.
- Apply. You’ll share business details and usually allow a credit check.
- Pay the premium. This is usually a small percentage of the bond amount. Strong credit means a lower rate.
- File the bond with the agency that requires it, and keep a copy.
How to get insured: step by step
- List your risks. Customers visiting? Working in clients’ homes? Giving advice? Using a vehicle?
- Talk to an independent agent who can compare several insurers.
- Get at least three quotes and compare coverage limits, deductibles and exclusions, not just price.
- Buy the policy and ask for a certificate of insurance (COI) to share with clients.
- Review yearly as your business grows.
Does a home business need insurance?
Yes, usually. Standard homeowners or renters insurance often excludes business equipment and business liability. Learn more in our guide on starting a home business.
How much does it cost?
Costs depend on your industry, location, revenue, claims history and credit. Low-risk service businesses usually pay much less than construction or food businesses. Getting several quotes is the only reliable way to know. Record premiums as business expenses, as explained in how to track business expenses.
Frequently asked questions
Do I need to be bonded and insured?
It depends on your state, industry and clients. Many contractors must be, and many clients ask for proof even when it isn’t legally required.
How long does it take to get bonded?
Simple licence bonds can often be issued within a day or two. Larger contract bonds take longer.
Can I get bonded with bad credit?
Often yes, but the premium will be higher. Some providers specialise in higher-risk applicants.
Is “licensed, bonded and insured” a legal term?
It’s a common marketing phrase. Make sure you actually hold each item before you advertise it.
Ready to promote your protected business? See how to market a small business.
This article is general information, not insurance or legal advice. Requirements vary by state and industry.
