Licensed and Bonded - The Slogan of The Marginal and Deceptive Mover

Industry Advisories - Publish Date: November-12-08

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By Christopher Noblit, Avatar Relocation - A customer is asking "Is your moving company bonded?" and you're not sure how to answer, so I thought I'd put together this article on "bonding" and the moving industry. What is bonding, and is bonding meaningful to the moving & storage industry? Any and all comments, corrections, and opinions would be most welcome...

What is a Bond & Bonding?
Simply put, a bond (sometimes referred to as a surety bond) is a third party obligation promising to pay if a vendor does not fulfill its obligations under a contract. There are various types of bonds such as a License Bond, Performance Bond, Bid, Indemnity Bond, and Payment Bond. A bond is a financial guarantee that you will honor a business contract.

A PERFORMANCE bond is a guarantee that you will perform work in accordance with the terms of a contract. A BID bond is a guarantee you will perform work if the bid is won by you. A INDEMNITY bond promises to reimburse loss incurred if you fail to perform or if you fail to pay other vendors in the performance of the contact. A LICENSE bond is required by some states for certain businesses. A PAYMENT bond promises you will pay all subcontractors and material providers utilized in the performance of a contract.

It is important to remember that these types of bonds are not insurance policies. Rather, such bonds provide assurance that the contracted work will be satisfactorily completed. For example, your bond will not pay for property damage or personal injury resulting from your work. For this you need conventional insurance coverage.

A bond for general business is usually a form of fidelity bond and this bond protects your customers from theft by your employees. A general business bond is a fidelity (Business Services) bond and it is very similar to insurance as it protects your clients in the event an employee is arrested and convicted for stealing from them. You will not be expected to cover the loss.

In addition, "Bonded" is also a term (often misused) for the interstate movement of cargo "In Bond". Bonded transit is the movement goods by a "bonded" carrier inland from an entrance port (when the cargo has not yet cleared customs). In such an instance the goods are required to move "In Bond" to a bonded warehouse where they will remain until custom clearance procedure has been completed.

Bonding & The Moving & Storage Industry
To a large extent bonding is meaningless to the moving & storage industry and to the COD customer and, while movers used to bond individual drivers who carried large amounts of cash, today few movers are bonded. In the past "Bonded" became an advertising catch-word movers used to present the public with an image that communicated trustworthiness. However, between today's Commercial Drivers License, background checks, safety qualifications, drug testing, and insurance requirements which professional movers are required to meet, bonding has become a meaningless action.

Summary: Bonding - The Slogan of The Marginal & Deceptive Mover
"Bonded" is a term ill-suited to assure a customer that the mover in question is professional and adequately protected by insurance, testing, license compliance. Today "Licensed, Bonded, and Insured" remains either a misused catch-phrase slogan of the marginal deceptive mover, or a term which is misunderstood by customers seeking a moving company they can rely on.

Article Sources
This article borrowed liberally from the following web pages in addition to advice and opinions from several friends…

http://www.southcoastsurety.com
http://www.isquare.com/faq.cfm

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