How to Get Bonded & Insured for a Small Business

Starting a company comes with a large to-do list, and one of those tasks may be getting your small business bonded and insured. After all, this is often a requirement to obtain certain professional licensing or contract work.

In our guide below, we dive into everything you need to know about getting surety bonds and insurance. We cover the difference between bonding and insuring, how they can help grow your business, where to find the best premiums, and more.

Being bonded and insured means your business is covered by two essential protections: a surety bond and business insurance. A surety bond ensures your customers are compensated if your business fails to meet legal or contractual obligations, while business insurance protects your company from unforeseen risks like theft, accidents, and natural disasters.

Surety Bonds: Protecting Your Customers 

A surety bond acts as a financial guarantee for your customers. It ensures they are compensated if your business fails to meet legal or contractual obligations, such as breaching a contract, engaging in dishonest practices, or causing financial harm. While surety bonds are often required for licensing or specific contracts, they also help build trust with clients, assuring them that they are financially protected.

Insurance: Safeguarding Your Business Assets

Business insurance protects your company's physical assets and operations. It covers unexpected events like theft, fire, accidents, or damage caused by natural disasters. While some forms of insurance are required by law, such as workers' compensation, others may be optional but are highly recommended to ensure that your business can recover from unforeseen incidents without significant financial hardship. Insurance helps keep your operations running smoothly and shields your business from potential financial loss.

Surety Bonds vs Business Insurance: What’s the Difference?

Business insurance protects your business, while surety bonds protect your customers and the general public.

For small businesses, bonding and insurance aren’t just regulatory requirements—they help protect your company, your customers, and your reputation. While not every business is legally obligated to have both, many industries rely on bonding and insurance to increase trust, credibility, and to comply with industry standards. Below, we’ll break down which small businesses typically need to be bonded and insured and why it’s essential to your success.

Contractors and Construction Professionals

Construction companies often need both bonding and insurance. Bonds protect your clients from financial loss if you fail to meet contractual obligations or violate regulations. Insurance, such as general liability, covers accidents and damages that occur on the job. Many states require bonding for contractors, especially those handling large-scale or public projects.

Cleaning and Janitorial Companies

Cleaning businesses may be required to be bonded in certain jurisdictions or when contracting with larger organizations. A janitorial bond protects clients from financial loss in cases of employee theft, while liability insurance safeguards against accidents or damage during services. These protections are essential in establishing trust with customers.

Auto Dealers and Repair Shops

Auto dealers are often required by law to have a surety bond to protect customers against fraud or failure to fulfill contract terms. Insurance is also critical for auto repair shops to cover damages, theft, or accidents that can occur during repairs or service. Both bonding and insurance contribute to building a reliable and trustworthy reputation in this competitive industry.

License and Permit Bonds

Required to get some types of work licenses and permits. These bonds are commonly needed by auto dealers, contractors, freight brokers, and more. 

Contract Bonds

The Miller Act requires contractors who work on construction projects over $100,000 to hold a bond. This is mainly for public construction projects but can also apply to private projects.  

Business Service Bonds

Protect your customers from dishonest employees (ex. theft). While this is one of the few surety bonds that may be elective, it can greatly increase client comfort and trust. 

Fidelity Bonds

Protects both your customers and your company from dishonest employees. It provides coverage for money, securities, and other property losses resulting from theft or embezzlement.

General Liability Insurance

Protects your company from claims made by others for injury or wrongdoing. Also known as Business Liability Insurance. 

Commercial Property Insurance

Protects your business property and its contents. If either is damaged, the insurer will pay to repair or replace the losses. 

Business Owners Policy (BOP) Insurance

A policy that combines both General Liability Insurance and Property Insurance. Ideal for small to mid-sized businesses. 

Worker’s Compensation

A legally required policy for businesses with employees. It covers medical expenses and lost wages if an employee falls ill or is injured due to their employment. 

Usually, a bond is a legal requirement to operate your business. However, in cases where it is not, certain bonds can help you grow your business. 

Build Customer Confidence with Bonds

A surety bond assures your customers that if something goes wrong, they are financially covered. It also lends your business legitimacy. Showing that you are bonded and insured can greatly help build customer trust—especially for new businesses. 

Open New Opportunities with Bonding

Certain bonds can allow you to take on bigger contracts in some industries. For example, a contract bond is a requirement for construction companies to take on projects over $100,000. Commercial cleaning companies also commonly need bonding to take on large contracts.

Bonding costs typically range from 1% to 10% of the required bond amount. For example, a $10,000 bond may cost between $100 and $1,000 annually. Insurance costs vary based on coverage, with general liability insurance typically costing $400 to $600 a year for small businesses. Specialized policies like BOPs can range from $1,000 to $1,200.

To keep costs manageable, businesses can improve credit scores, compare multiple quotes, and bundle insurance policies for discounts. Industries that are considered high-risk may face higher premiums, so it's important to assess the specific needs of your business and industry. By maintaining strong documentation and a good track record, you can reduce premiums over time and secure the best rates for both bonding and insurance.

JW Surety Bonds is the nation’s largest surety bond and insurance service. You can get bonded and insured all in one place while enjoying other benefits such as:

• The lowest rates in the industry. Our high volume allows us to negotiate the best bond rates on your behalf.
• Instant bond quotes that are available 24/7.
• Dedicated bond experts to guide you through the entire bonding process. 
• In-house claim specialists.
• 100% money-back guarantee. We will send you a full refund if your policy is not accepted.