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7 Point Review Process - Licenses



You see it on the side of company vans and trucks all the time, “Licensed, Bonded, and Insured.” Those kinds of buzz words are meant to sound impressive. They reassure customers that a business is playing by the rules and is fully qualified to earn their business. After all, wouldn’t you want to work with a business that has all sorts of certifications attesting to their trustworthiness? But what do those words really mean? Licensed, bonded, and insured are actually very specific technical terms. If you don’t know what they mean, and you don’t follow up to confirm they are true, you could land yourself in some real trouble.


When a business says they are licensed, that usually means that they have a business license. Business licenses are typically issued at the city or county level and are required for most businesses. If a company doesn’t have a valid business license, that should be a red flag that they are not running their business legally and legitimately.

In the case of certain professions, additional licensing may be necessary to perform a type of service legally. For example, a general contractor needs a license to perform construction work. A hairstylist requires a license to cut and style hair. Licenses for specific professions are usually issued on a state or local basis.

Hiring a professional who is not licensed to perform the service you are paying for could result in fines or other legal trouble. For example, if a contractor does construction on your home without a license, you may be required to undo any construction they performed.

Bonded and Insured

Most of us are familiar with insurance. You pay a premium in exchange for coverage in case of some kind of mishap. The coverage guarantees some amount of financial coverage to cover the cost of the mishap. In the case of businesses that are insured, it is usually to cover their workers in case of injury. For example, if you hire a company to build a swimming pool in your backyard, and a worker is injured during construction, their insurance would cover the worker. If the construction company didn’t have insurance, any injury claims would have to be submitted to your homeowners insurance, leaving you with a hefty deductible and potentially making it much harder for you to get coverage in the future.

‘Bonded’ is the least common and most misunderstood of the three standard terms applied to businesses. A bond is like extra insurance purchased by a business. Bonds often cover situations in which a contract was not fulfilled, property was damaged, or there was some instance of theft. If a company has purchased a bond, the customer can make a claim to the insurance company that provided the bond for a set amount of money. Typically, a business pays a small percentage of the total amount of a bond as a sort of premium. For example, a company might pay $500 for a $50,000 bond, or 1%.

The TrustDALE 7-Point Review

It is important always to ensure that a company you do business with is licensed, bonded, and insured. In case something goes wrong, it can save you from significant financial damage. But licenses, insurance, and bonding are expensive, and sometimes a business will choose not to renew them, despite the danger to their customers.

So how do you know if a company really is licensed, bonded, and insured? We recommend that you always ask for the insurance policy number and look up any licenses, etc., that a company claims to hold. However, that can be tedious and time-consuming. Luckily, when you hire a TrustDALE certified business, Dale has done the work for you. Dale does the research to ensure that every company he certifies has the appropriate licenses, bonding, and insurance to legally be in business and to protect consumers.