You’ve heard it many times before. You may have even wondered, but what does easement and insurance actually mean? Why do you need to ask providers about this? Is this really important?
First, I will explain what each one means. Then I’ll go into detail about what’s important with these terms.
There are only three types of bonuses available. The first is a bond. This only applies to people who are trying to get out of jail, therefore it does not apply to hiring a provider. The second is an employee dishonesty bond, or a bond as they are also called. The third is a performance bond. These are frequently used by contractors to guarantee their services.
I’ll skip the bail discussion.
An insurer issues an employee dishonesty bond, or surety bond, to protect against theft. These are issued in various quantities. The most common is $5,000. I’ll use an example of how this would work. Suppose you hire a contractor to work on his house. In the process of working on his home, he notices that some of his jewelry is missing. You contact the police and the bail bond company. Upon investigation, it is determined that the contractor took the jewelry from him.
The bail bond company will then notify you that they will award the price of the jewelry or the maximum amount covered by the bond. The bail bondsman will wait for a conviction from the person who took your jewelry. If the adjuster determines that your jewelry is worth $6,000 and the bond is $5,000, he will award you $5,000 because that is the maximum covered by the bond. There are conditions for this. The bonding company will only award the amount if the asset is not recovered. And, the bail bond company will only bond after a court conviction occurs.
A bond of fulfillment of the service or work of guarantee is taken. Again, another example. Suppose he hires a contractor to build his dream house. The price to build the house from him is $250,000. You may be issued a bond for the project at the contractor’s expense. This would cover you if the contractor tries to leave before the project is complete. Or if the contractor does not comply with the obligations agreed in the contract. If you go to a bank to build your house, they will most likely require the bond to be issued to them as they will be more exposed to loss. Performance bonds can be made from a variety of things, but are most often used in the construction or contracting business.
Speaking as the owner of a cleaning company, there are things more important than a bonus. There are many companies that cover theft internally. That is, they have a policy against theft and cover the losses themselves due to the size of their companies. If it’s theft, just ask up front, “What’s your policy on employee theft?” You’ll also want to ask about background checks on staff. If a company is willing to cover the theft in-house, you can be sure that they will use an accurate criminal background check.
When it comes to insurance, the insurance referred to is called commercial general liability insurance. This insurance will provide coverage for a variety of things. Some of the things covered are: damage to your property, personal injury, and finished products or operations (labor). We will break down each of these for further explanation.
Damage to your facilities includes accidents. If you hire a flooring service to strip and wax your floors, and they lose control of their equipment and damage a wall. This would be covered in commercial general liability insurance. The deductible would be the responsibility of the contractor or seller. There are a variety of things that can go wrong on your premises. Whether it’s paint chips, broken glass, or damage to your contents.
Personal injuries in this case would include injuries to your staff caused by the provider’s staff. Let’s say the same floor service company injured their staff when they lost control of their equipment. This is covered by some commercial general liability policies. It is important to look at the amount covered in these separate items.
Completed operations or labor is a wide range of items. If the same flooring service company did not follow through on their promise to strip and wax your floor, this would fall as full labor. If damage occurred during this process, this is also covered, as is the damage mentioned above.
To seek compensation for anything that is covered by commercial general liability insurance, there are several steps that must be followed. First of all, the insurance company should be contacted as soon as possible. The insurance company will then send an adjuster to assess the damage. Once a damage figure is established, the insurance company will contact you to compensate for your damages. If there is a deductible in the policy, it is the responsibility of the contractor to pay it.
There are several things you need to do when interviewing a potential vendor. First, ask for a copy of your insurance. Then contact the insurance company to make sure the policy is valid and up to date. You can also ask at this time exactly what is covered. This will be of great help before hiring any supplier.
If a provider does not have insurance, they risk exposing themselves to losses for anything they damage. Sure you can sue your business if they damage your facility, but if they don’t have insurance, what are the chances they have assets to cover their losses?
In closing, the most important thing to consider is commercial general liability insurance. If a potential vendor doesn’t have a commercial general liability insurance policy, avoid them like the plague. If a provider tells you they have commercial general liability insurance, ask for a copy. Then contact the insurance company listed above and check the validity of this policy. Also, ask about coverage amounts.