Learn more about protecting your business from unexpected costs. This step is recommended but not required.
There are many different kinds of business insurance. Each kind exists to protect your business from unanticipated costs due to accidents, errors, or lawsuits. If you’d like to learn more about the different types of business insurance, the U.S. Small Business Administration has good explanations available here.
It’s important to carry at least some basic business liability insurance to provide financial protection against lawsuits due to simple accidents like trips and falls in or around your business location. You can also obtain a policy to protect your business from costs related to errors or omissions made while performing services for customers.
The easiest way to determine the insurance needs for your business is to find an insurance broker to work with. They will help you identify areas of risk for your business and provide quotes for insurance policies to cover those risks.
Insurance costs will vary significantly based on your specific business needs. While starting your search for an insurance broker, you should be sure to obtain estimates from a few places to make sure you get a good price.
Surety bonding functions as a sort of insurance policy that helps the UG guarantee that your business will complete contract work correctly. The UG has an obligation to taxpayers and citizens to make sure funds are spent responsibly and that infrastructure is properly built. Bonding helps the UG see that your business is able to complete quality work in a reliable and timely fashion.
The UG requires different kinds of bonding depending on the type of contract. Construction contracts require different kinds of bonding than other contracts.
Any county-level construction contract over a $25k threshold also requires bonding per the Kansas Statute 19-214.
Any city-level construction contract over $50k threshold requires bonding.
There are four agents involved in a typical bonding agreement:
Your business pays a premium to the Surety Company, which is a small percentage of the bond total. If your business fails to complete work to the UG’s standards, the Surety Company will step in to rectify any issues and reimburse the UG up to the full amount of the bond.
For example, your business might pay a $100 premium to obtain a $5000 surety bond. The UG is then able to recoup up to $5000 in damages from the Surety Company if needed. The Surety Company will then in turn attempt to recoup that amount from your business.
The U.S. Department of Transportation periodically runs a program to help small businesses get bonded called the Bonding Education Program. This program is a good way to increase the bonding capacity of your business.
Additionally, the National Association of Surety Bonding Professionals has an online course for contractors that further explains the bonding process.
UG bond forms can be found here, and at the below links:
A Bonding Agent can help your business to obtain a bond from a Surety Company. The Bonding Agent helps evaluate your business and pre-approves your business for an appropriate bond amount. You must work with a licensed Kansas Bonding Agent in order to obtain a bond for your business.
There are various ways to find licensed Bonding Agents. If your business is well-established, you will likely not have any trouble finding an agent willing to work with you. However, if your business is newer, you may need to contact a number of different bonding agents or work with the U.S. Small Business Administration to find an appropriate match.
The National Association of Surety Bonding Professionals maintains a nationwide directory of bonding agents.
The U.S. Small Business Administration also has a directory of bonding agents that are approved to issue bonds backed by the federal government. These bonding agents can be helpful for newer businesses.