Moving companies: What does bonded mean?

When looking for moving companies, you will often find the catchphrase “licensed, insured, and bonded.” This sounds good, so the moving company is reputable – right? Yes, you definitely want a licensed and insured moving company. In fact, in most states it is required by law for movers to be licensed and insured, so any company which isn’t is going to be a scam company. Long distance movers must always be licensed and insured.

But what about bonded? What does bonded even mean and how does it pertain to the moving industry?

It is important to remember that a bond is NOT an insurance policy; a bond only provides assurance that the contracted work will be completed according to the project specifications. For example, a bond will not pay for property damage or personal injury resulting from the work which has been performed. For this type of coverage you will need a conventional insurance policy.

The many types of bonds:
Before we get into bonds and the moving industry, you’ve got to understand that there are many types of bonds. All of these are a type of assurance that a performance will be performed.

• Performance Bond: A performance bond means that the contractor (moving company) will perform the agreed-upon services as laid out in the contract. If not, then the client receives the bond money.
• Bid Bond: This is similar to the performance bond, except that it must be submitted with the bid for the job. Performance bonds can be obtained after the job is awarded.
• License Bond: Some types of contractors are required by certain states to have a bond. These are license bonds.
• Payment Bond: This bond guarantees that the contractor will pay all subcontractors and costs. If the contractor doesn’t pay, then the bond is cashed to cover the costs.
• Indemnity Bond: This is a guarantee that the contractor will pay for losses which occur if they fail to perform or if they fail to pay their bills.

A bond is assurance, not insurance!
A lot of people confuse bonds with insurance. Bonds only offer assurance, or a guarantee, that the services will be done according to the contract. A bond will not cover any damages to your property, any physical injuries, or theft.

How do bonds apply to the moving industry?
Most of the types of bonds do not apply to moving at all. The only one which vaguely applies is the performance bond. With this bond, if the moving company fails to show up on moving day, then you could collect the bond amount. Yes, this does sometimes happen – which could mean a disaster if you are required to get out of your home right away. It doesn’t hurt to have a moving company which has a performance bond. However, you should be more concerned about the reputation of the moving company than whether they have a bond or not.