INSURANCE & BONDS ?

Discussion in 'Lawn Mowing' started by Mowman, Nov 14, 2000.

  1. Mowman

    Mowman LawnSite Senior Member
    Posts: 553

    AS FAR AS INSURANCE I HAVE A 1,000,000 LIABLITY POLICY. I WANTED TO BID ON SOME JOBS IN MY TOWN, THEY WANT 1,000,000 IN LIABLITY AND A 1,000,000 BOND. IF YOU COULD EXPLAIN WHAT THE BOND IS FOR? ONE PERSON TOLD ME TO HAVE A 1,000,000 BOND I NEEDED TO HAVE $250,000 LIQUID ASSESTS. IS THIS TRUE? IF SO I DO NOT HAVE THOSE KIND OF ASSESTS. THANKS FOR YOUR HELP.
    Mowman
     
  2. Prime Seasons

    Prime Seasons LawnSite Member
    Posts: 57

    I bid on a state job last March. Required was 1.) liability insurance, and 2.) performance bond. It was new territory to me then, but it works something like this: performance bond insures that you the contractor perform the work as stated in the bid contract. Else they can sue you for performance obligations for the work not done.

    My insurance agent told me how much the extra insurance would cost and then I factored that amount into my bid quote. My bonding, to the best of my knowledge, was not based on equity. And by the way, I did not get the state job after all.
     
  3. Skookum

    Skookum LawnSite Senior Member
    Posts: 675

    I know areas are different and I have seen many on this site mention being bonded. Unless you are looking at some sort of major landscape jobs, I think bonds are a little crazy for our lawn care industry.

    I called our city engineer once about some sort of contracting work,( cannot remember what )And I was told that it required a bond and a certian amount of insurance. It was explained to me that it only cost a few dollars per 1,000. I remembered he explained to me that it worked like this: It was like intimidation on the contractor forcing them to make sure they follow codes, etc.. If codes were broke then the bond would kick in for the customer making sure the contractor fixed them. If he did not, then the bonding company, which can be the city in some places, will then use this bond to retrieve costs involved through litigation. Only problem is, the company must still be in business and the bond in force.

    So I guess Insurance only covers us when we screw up and Bonding is a communities way to try and make sure we do not do sub-standard work on purpose.
     
  4. Skookum

    Skookum LawnSite Senior Member
    Posts: 675

    I just remembered something about bonds. I had a freind whose dad was a big time commercial contractor. He had a job once that was like a 5 million dollar building. The job required a bond. He had to use his assets as the collateral against the bond, but he only had to actually pay a few thousand up front for the bond. It sticks in my head because they had a hard time showing the amount in company collateral, so he had to list his house as well.

    I recall that this was a job by job basis, once the job was done, so was the bond.
     

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