Bonded?

[coolbrze]

We're only licensed & insured but want to get some info on getting bonded. What are the industry "standards" for bonds in the tree & landscaping industry, e.g. insurance seems to be 1/2 mil. What are the pros/cons about being bonded?

 

[tree md]

I am not bonded and never have been. As I understand it, that is geared more towards construction businesses and companies that get money paid to them in advance. What I understand about bonding is that it is basically insurance that will pay out a cash bond should you renege on work after you have taken a draw. Most construction companies will require a draw up front for materials. This insures that the client is serious and committed to the work and assures the construction company that they will not be out materials on the job should the client renege. A bonded company is insured for cash up front deals and the bonding agency will make good on any monies received without services rendered should a company not be able to start and complete the job for whatever reason.

At least that is my understanding. However, I am no lawyer so take that for what it's worth.

Tree services need no materials so we don't need money up front and shouldn't be asking for any. Therefore there is little reason for us to be bonded. I explain this to my potential clients should they question me about bonding.

 

[komatsuvarna]

I am not bonded and never have been. As I understand it, that is geared more towards construction businesses and companies that get money paid to them in advance. What I understand about bonding is that it is basically insurance that will pay out a cash bond should you renege on work after you have taken a draw. Most construction companies will require a draw up front for materials. This insures that the client is serious and committed to the work and assures the construction company that they will not be out materials on the job should the client renege. A bonded company is insured for cash up front deals and the bonding agency will make good on any monies received without services rendered should a company not be able to start and complete the job for whatever reason.

At least that is my understanding. However, I am no lawyer so take that for what it's worth.

Tree services need no materials so we don't need money up front and shouldn't be asking for any. Therefore there is little reason for us to be bonded. I explain this to my potential clients should they question me about bonding.

That pretty much sums it up. Nearly all the work we do(utilities) has to be bonded. Its kind of a insurance for the owner that your working for. If I start a job and leave it half way done( which you dont want to do or youll never get another bond) the bonding company hires someone else to finish up. However, I get no money up front.... Never. If I put parts on the job that cost 500,000.00, Im allowed to turn in for stored materals at the end of the month. Then 60 to 90 days later I get a check for the materals, and what ever work I completed that month.

I agree that tree services dont need bonded. Besides that, It cost between 2 and 3 % of the job, including the materals too.

 

[ATH]

that is a "performance bond".

there is also bonding - I can't remember what it is called - that protects the clients should your employees commit a crime (steal something from the house, for example). This is the one that some clients may be used to seeing (from a maid or the like).

 

[mckeetree]

We're only licensed & insured but want to get some info on getting bonded. What are the industry "standards" for bonds in the tree & landscaping industry, e.g. insurance seems to be 1/2 mil. What are the pros/cons about being bonded?

Nobody bonds in the tree business anymore. Every once in a while some real, real old guy will mention it but I mean he would have to be pushing 100. I think some service companies bonded back in the days when they didn't carry insurance. Did you just step out of a time machine from 1967?

 

[Taxmantoo]

I don't like to use the words 'bond' and 'insurance' in the same sentence.
Insurance is something you buy so the insurance company will take the risk for you.
Bonding means you give the bond company a lien on enough of your assets to cover the bond. The bondsman's promise to your clients is that he'll pay them and take your assets to repay himself. I don't ever want to be bonded.

 

[ducaticorse]

You need to be bonded in the city of Boston to do ANY work that requires the use of public streets, or sidewalks. IE parking on the street and throwing a boom over the sidewalk to access a tree

 

[Art Vandelay]

That pretty much sums it up. Nearly all the work we do(utilities) has to be bonded. Its kind of a insurance for the owner that your working for. If I start a job and leave it half way done( which you dont want to do or youll never get another bond) the bonding company hires someone else to finish up. However, I get no money up front.... Never. If I put parts on the job that cost 500,000.00, Im allowed to turn in for stored materals at the end of the month. Then 60 to 90 days later I get a check for the materals, and what ever work I completed that month.

I agree that tree services dont need bonded. Besides that, It cost between 2 and 3 % of the job, including the materals too.

Same here in construction. Some commercial jobs require it, rarely residential do. We've never got a nickel in advance from anyone for anything. Wouldn't trust a company who did ask for money in advance of the work. We can partially bill the job if it is large and time consuming to pay the for the materials at the end of the month, usually 50% when the job is half completed.