Getting Bonded in Ohio for Small Businesses

If you live in Ohio and are a small-business owner, a bank teller or a locksmith, you may already know that it is recommended that you get "bonded"--or covered by a bond agency that will reimburse an obligee for stolen or broken goods as a result of your work. Being bonded also provides your customers protection in the event that you do not complete your proposed work according to the conditions in a contract. Bonds are different than insurance, in that bonds do not cover accidental damage, but instead cover intentional damage or negligence. Follow these steps if you are going to get bonded in Ohio.

Instructions

    • 1

      Begin by examining your business plan/job and determining the type of bonding that you need. For example, are you a business owner with employees who will be visiting people's houses? If so, you should look into license bonds that cover any property that may be stolen by those employees. If you are a contractor, you may also think about Bid bonds or Performance bonds. Bid bonds guarantee that you will perform work you bid on, and performance bonds guarantee that your clients will get your best possible work. The Ohio Business Development agency has a bond program that offers low-interest bonds and loans to businesses that are purchasing land, equipment or services in the state, and your local chapter of the Small Business Development Association has the application for this program. (See Resources.)

    • 2

      Once you have determined a type of bond from your business information, contact the insurance agent through whom your business is insured. Insurance agencies not only provide insurance, but can bond you as well. There is no statewide requirement for being bonded in Ohio; however, most insurance companies recommend at least $1,000,000 in coverage. When applying for your bond, be prepared with personal information about yourself, your employees and your spouse, as well as business financial information and licensure information. The agent will assist you in filling out an application for being bonded in Ohio, and will provide premium estimates.

    • 3

      Call a few bond agencies and other local insurance agencies from the local Yellow Pages and perform the same process of filling out an application, checking on premiums and weighing the pros and cons of each bond type. The agents should very precisely lay out what is covered by each bond and suggest the best type for your business. As a general reference, typical bond premiums will total around 1 to 3 percent of the total contract price--or, as a general rule, $1,000 to $3,000 per year. Sometimes, your local Small Business Development Center can provide references to large Ohio insurance companies, or even provide assistance from one of the industry-specific bond programs offered by their agency. As these programs are constantly changing, the best way to determine the right program for your business is to visit the SBDC in your area.