Many companies proudly advertise that they are licensed, bonded, and insured. It’s a phrase you’ll hear over and over again form plumbers, movers, roofers, remodelers, and plenty of other service providers. But do you know what it means to be licensed, bonded, and insured? And does it really matter if a company is licensed, bonded, and insured?


Licensing is probably the easiest term to understand. You know you can’t legally drive without a driver’s license issued by the state. Many trades and professions also require licensing from a city, county, or state government. All sorts of businesses and individuals from nail salons to real estate agents to building contractors need a license to do their work legally. In most cases, a business or individual needs to show a certain level of expertise in their field and familiarity with applicable laws and regulations to get a license. Performing these services without a license is just as illegal as driving without a license. You wouldn’t want to hop into a taxi with an unlicensed driver. In the same way, you should never do business with an unlicensed business or individual service provider.


This is a less common term, and is often misunderstood. Bonding protects you, the customer, in case the business does something to harm you financially. Imagine, for instance, that you hired a plumber. The plumber came to your home, and in coming and going they trampled an expensive rug, causing significant financial loss. You could complain to the plumber, but you might never see your money, especially if the plumber claims not to have that sort of cash on hand. That’s where the bond comes in. If a company is bonded, they have already put some money into a security controlled by the state, i.e., a bond. In case you make a claim for financial damages, that money is available to settle the claim, regardless of what cash the company has on hand currently.


Any company you do business with should be insured. That’s because insurance can protect you against some pretty expensive claims. Let’s go back to our example of the plumber. The plumber is working on a leaking pipe in your basement. As they come and go, they slip on the wet floor of the basement and injure themselves badly. All of a sudden there are substantial financial damages. Hospital bills, lost work time, and other related costs can skyrocket. If the plumber isn’t insured, the only way they can pay their medical bills is to file a claim with your homeowners insurance. That won’t work out well for you. But if the plumber is insured, they are covered by their own insurance, and it is the plumber’s insurance, not yours, that will pay for their fall.

Making Sure a Company Is Licensed, Bonded, and Insured

Many companies will tell you they are licensed, bonded, and insured, but don’t just take their word for it. Licensing can be expensive and time-consuming. Bonding also requires a financial outlay. And insurance premiums have to be kept current to maintain insurance. The whole thing is costly and time-consuming, so even if a company was at one time licensed, bonded, and insured, they may sometimes let one or all of those lapse. You don’t want to be the unlucky customer who ends up with a problem and finds out that the license, bond, or insurance has lapsed. So when a company tells you they are licensed, bonded, and insured, ask for documentation. Get their license, bond, and policy numbers and reach out to the companies directly to verify that the company is current and in good standing.

If you want to save time, we have a great alternative to researching a company’s credentials. Every company on the TrustDALE website has been carefully researched and their credentials independently verified. It’s step 4 of Dale’s trademark 7-Point Review Process™. So when you do business with a TrustDALE certified company, you can trust Dale, and leave the homework to the TrustDALE team.

Dale's New Book:
Don't Get Scammed: Get Smart!