You’ve heard it many times before. Maybe you’ve even wondered, but what does easement and insurance really mean? Why do you need to ask providers about this? Is this really important?

First, I’ll explain what each one means. Then I’ll go into detail about what’s important with these terms.

There are only three types of bonuses available. The first is a bond. This only applies to people who are trying to get out of jail, therefore it does not apply to hiring a provider. The second is an employee dishonesty bond, or bond as they are also called. The third is a performance bond. These are frequently used by contractors to guarantee their services.

I’ll skip the bail discussion.

An insurer issues an employee dishonesty bond, or surety bond, to protect against theft. These are issued in various quantities. The most common is $5,000. I’ll use an example of how this would work. Suppose you hire a contractor to work on his house. In the process of working on his home, you notice that some of his jewelry is missing. You contact the police and the bail bond company. After an investigation, it is determined that the contractor took his jewelry.

The surety bond company will then notify you that it will award the price of the jewelry or the maximum amount covered by the bond. The surety company will expect a conviction from the person who took your jewelry. If the adjuster determines that the value of your jewelry is $6,000 and the bond is $5,000, he will award you $5,000 because that is the maximum covered by the bond. There are conditions for this. The surety company will only award the amount if the property is not recovered. And, the bail bond company will only grant after a court conviction occurs.

A bond is taken for compliance with the service or guarantee work. Again, another example. Suppose you hire a contractor to build his dream home. The price to build his house is $250,000. You may be issued a bond for the project by the contractor. This would cover you if the contractor tries to leave before the project is complete. Or if the contractor does not comply with the obligations agreed in the contract. If you go to a bank to build your house, they will most likely require the bond to be issued to them, as they will be more exposed to losses. Performance bonds can be pulled from a variety of things, but they are most often used in the construction or contracting business.

Speaking as a cleaning company owner, there are more important things than a bonus. There are many companies that cover theft in-house. In other words, they have a theft policy and they themselves cover losses due to the size of their companies. If it’s theft, just ask up front: “What is your policy on employee theft?” You’ll also want to ask about background checks on staff. If a company is willing to cover theft in-house, you can be sure that they will use an accurate criminal history search.

When it comes to insurance, the insurance referred to is called commercial general liability insurance. This insurance will provide coverage for a variety of things. Some of the things covered are: damage to your property, personal injury, and finished products or operations (labor). We will break down each of these for further explanation.

Damage to your facilities includes accidents. If you hire a floor service to strip and wax your floors, and they lose control of their equipment and damage a wall. This would be covered under commercial general liability insurance. The deductible would be the responsibility of the contractor or vendor. There are a variety of things that can be damaged at your facility. Whether it’s paint scratches, broken glass, or damage to your contents.

Personal injuries in this case would include injuries to your personnel caused by the provider’s personnel. Let’s say the same floor service company injured its staff when it lost control of its equipment. This is covered by some commercial general liability policies. It is important to look at the amount covered in these separate items.

Completed operations or labor is a wide range of items. If the same floor service company did not follow through on their promise to strip and wax your floor, this would fall as full labor. If damages occurred during this process, this is also covered, just like the damages mentioned above.

To seek compensation for anything that is covered by commercial general liability insurance, there are several steps that must be followed. First of all, the insurance company should be contacted as soon as possible. The insurance company will then send an adjuster to assess the damage. Once a damage figure is established, the insurance company will contact you to compensate your damages. If there is any deductible in the policy, it is the contractor’s responsibility to pay it.

There are several things you need to do when interviewing a potential supplier. First, ask for a copy of your insurance. Then contact the insurance company to make sure the policy is valid and up to date. You can also ask at this time exactly what is covered. This will be of great help before hiring any provider.

If a provider does not carry insurance, they risk exposing themselves to loss for anything they damage. Sure you can sue your company if they damage your facility, but if they don’t have insurance, what are the chances they have assets to cover their losses?

In closing, the most important thing to consider is commercial general liability insurance. If a prospective provider does not carry a commercial general liability insurance policy, avoid them like the plague. If a provider tells you they have commercial general liability insurance, ask for a copy. Then contact the insurance company listed above and verify the validity of this policy. Also, ask about coverage amounts.