Questions about bond for commercial work

[jdinstl]

Hi everyone!

I've been working with my insurance agent on liability insurance and bonding issues. Happily, I way over guestimated the cost of liability insurance -- woohoo! Not bad at'all, not bad at'all...

Now comes bonding. I want to be able to pursue commercial accounts, no doubt about it. But I'm not educated enough with regards to bonding, and neither is my agent with respect to commercial janitorial services. So while he firms up my liability insurance quote, my homework assignment is to research bonding.

Given that IJCSA is the best money I ever spent, I knew right where to head for enlightenment -- but I'm not sure of what questions to ask, or what information to offer you to find an accurate solution -- can y'all help me out?

Here's where I stand right now:

I will soon incorporate as an LLC in the state of Missouri.

Initially, it is going to be me, myself, and I.

I will pursue small commercial clients -- in fact have a pretty good lead on a 3 times weekly job for a beauty shop! ;D

Can you all educate me on the nuts and bolts of this bonding issue?

Thank you in advance for your help -- you people are awesome, and this site has given me so much information and motivation!

Cheers!

John

[Kevin]

Well the hardest part is over under now its $100.00 a year for a bond, call South Coast Surety our sponsor or Hatford, or any local agent you choose. Very simple, a couple questions, you pay your bonded.

[jdinstl]

I knew it.

I posted at 2:39pm.

Had an answer at 2:43pm.

I told my insurance agent "Steve, I'll probably have that question answered faster than you sill have the liability quote finalized." I knew the IJCSA would keep me honest!

Kevin, yer awesome! I will do just what you said!

Thanks muchly!

John

[Kevin]

Sometimes its that fast...lol let us know the final price paid.

[tcase27]

Do you have to be bonded to do commercial work? I will be working in the Iowa Nebraska area if that helps.

[J4K Cleaning]

You don't have to be bonded unless your customer requires you to be. I have heard that they are hard to collect on unless there is absolute proof of what happened.

[russo]

i have over 40 contracts for regular janitorial services and i am not bonded for one! i don't believe in it because insurance companies don't pay out unless there is an arrest and conviction and that is very rare because one has to be literally caught red handed! don't waste your time.

[J4K Cleaning]

What if the person admits to taking the items, is it covered? Or now a days there are video cameras every where, if the person is caught on tape a convection would be more likely. In those cases $100 a year seems cheap vs taking the money out of your own pocket.

[Kevin]

Yes if the person admits guilt to taking the items, and the police take a statement. Mike I think your taking an unneccesary risk. Bonding is under $100.00 per year Im sure with your 40 accounts you can find it in your profit margin somewhere to pick up this cost. Let me give you an example: A cleaner goes on a theft binge, at one of your accounts and removes lets say $4,000 worth of merchandise. The cleaner flees the state. The cleaner can not be located by you or the police. Charges are filed, a warrant is issued. In the meantime the account wants items returned, they are going to re-purchase, while also filing a claim with their insurance company, Their insurance company is going to do an investigation, they will find out all the facts. They will also come after you legally for re-imbursment as you are accountable for your employees actions. To stop this process you would just fax that insurance company your bond. They then have entitlement to the bond when the cleaner is caught. This is also a way for you to justify to your customer who was stolen from that you are fully prepared to handle this unfortunate issue.

[russo]

i highly doubt anyone will be readily admitting to stealing. if there was a theft in one of my accounts and things went missing, i would issue a check on demand. it has never happened thank God! We do extensive backround checks before hiring. oh... and Kevin... how much bonding coverage will the hundred dollars give you and what is the deductable for that?

[J4K Cleaning]

russo said:

i highly doubt anyone will be readily admitting to stealing. if there was a theft in one of my accounts and things went missing, i would issue a check on demand. it has never happened thank God! We do extensive backround checks before hiring. oh... and Kevin... how much bonding coverage will the hundred dollars give you and what is the deductable for that?

Actually we just went through this this past weekend. The police confronted my floor person about missing items, guess what, he admitted to it. So it can and does happen from time to time.

[Kevin]

Jeff. It was good he admitted it. Thats very rare. How are you and your customers handling the situation?

[J4K Cleaning]

It has been touch and go with one account. But I think we will be OK. Most of the items have been recovered which has helped as well. People never fail to amaze me!

[RJ Cleaning]

I think your taking a very big risk, especially where bonding does not even cost much, all it takes is one time. what happens if you just happen to get a bad employee and decide to not only clean the place, but, Really clean them out. they catch him on video, but the stuff is gone and sold. you will still be liable to pay for all that was stolen. if you were bonded then then you would be covered. all it takes is one time. and if the amount is high, it could set you back pretty bad. say for instance they actually stole 100k worth of stuff. are you ready to dish that kind of money out. does this usually happen in our business, nope. but then again all it takes is one time. I would never take that risk to save a hundred dollars. it just doesn't make sense, its not like your saving thousands of dollars. especially in our times, where the unknown is known to happen.
and just because somebody does a back ground check does not mean the person is honest, it just means they were not caught yet. for example: looking the priest that were all arested for child molestation, what would a back gruond check have done, nothing, because they just were not caught yet. I know this is totaly off. but what I'm saying every crimanal has started somewhere, they where not born with a crimanal record. just because there record is clean, does not mean they are clean. so the insurance could be a back up for those kind of situations.

russo said:

i have over 40 contracts for regular janitorial services and i am not bonded for one! i don't believe in it because insurance companies don't pay out unless there is an arrest and conviction and that is very rare because one has to be literally caught red handed! don't waste your time.