Payment and Performance Bonds Explained

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The two are an odd pairing—unique in their own way but dependent on each other. Although payment and performance bonds have their differences, both are essential in protecting yourself in the world of insurance. Let’s explore the differences.

Payment and performance bonds

Payment Bonds

Simply put, a payment bond guarantees payment for subcontractors and payment for materials once a project is completed.

Payment bonds are most commonly seen in construction. Payment bonds are a type of surety bond and are required for most state projects based on the Miller Act. 

Surety Bonds

What is a surety bond? 

A surety bond is a contract where one party (the surety company) guarantees the performance of certain obligations in a contract of the second party (the principal or the insured) to a third party (the obligee).

When Do You Need a Surety Bond?

Surety bonds are needed for most licenses in the state of California and other states as well. Some examples of who might need a surety bond include:

  • Contractors
  • Real estate companies and agents
  • Financial institutions
  • Janitorial

Why Do You Need a Surety Bond?

Licensed bonds are required in many states to do business and are put in place by the state to protect consumers.

The insured, or principal, purchases these bonds in an amount prescribed by the state to pay the obligee (the state), in case there’s a claim against somebody’s license.

The Miller Act

As previously mentioned, surety bonds are required for most state projects based on the Miller Act.

The Miller Act was passed by the U.S. General Services Administration Public Buildings Service (GSA) with the intention to explain how payment bonds protect subcontractors and suppliers.

The GSA responds to any reports of nonpayment, following the legal action needed and protected by the Miller Act.

The GSA states that “the Miller Act requires that prime contractors for the construction, alteration, or repair of Federal buildings furnish a payment bond for contracts in excess of $100,000.” 

There are legal consequences for breaking a contract through the Miller Act.

The GSA expands: “Failure by a contractor to pay suppliers and subcontractors gives such suppliers and subcontractors the right to sue the contractor in the U.S. District Court in the name of the United States.”

Performance Bonds

The main differentiator between payment and performance bonds is that a performance bond ensures that the employer is satisfied with the job.

While both payment and performance bonds are surety bonds, performance bonds are visible in industries outside of construction.

A performance bond, according to Investopedia, “ensures the completion of a project.” A performance bond covers the ability of the contractor to perform and finish the job as per contract requirements.

If the contractor doesn’t perform, the contract bond kicks in and helps to pay for the completion of that performance.

A performance bond involves three parties:

  • The principal: The primary contact in the performance bond; responsible for performing the contract
  • The obligee: The person receiving the obligation
  • The surety: Responsible for making sure each party complies with the performance bond obligations

A Final Note

If these bonds are used and there’s a claim on a bond, the contractor who purchased the bond has to pay that back.

This considered, surety companies look for strong financials in a company, including assets, lines of credit, and letters of credit.

For more information on surety bonds and contract bonds, watch this video where Brenda Jo Robyn, founder of Competitive Edge, lays it all out on the table.

How Small Businesses Fall Victim to Cyber Attacks

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Here’s a case study that details why it’s a problem, and how your business can prevent becoming the victim of a cyber attack.

What is Phishing?

Phishing is an ever-growing concern defined as the “technique for attempting to acquire sensitive data, such as bank account numbers, through a fraudulent solicitation in email or on a website, in which the perpetrator masquerades as a legitimate business or reputable person.”

According to Brenda Jo Robyn, founder of Competitive Edge Insurance, phishing is “any activity that compromises your organization’s security.” For more on phishing, read our article: “Why Is Phishing the #1 Thing Killing Small Businesses?”

Why Is Phishing a Problem?

Let us provide an example of the dangers of phishing.

On February 5, 2021, “a plant operator for the city of about 15,000 on Florida’s west coast saw his cursor being moved around on his computer screen,” according to The Pew Charitable Trusts. The cursor continued to move, “opening various software functions that control the water being treated [and boosting] the level of sodium hydroxide—or lye—in the water supply to 100 times higher than normal.”

If you didn’t know, the consequences of this breach could have been deadly if not caught immediately, as lye poisoning can result in:

  • Burns
  • Vomiting
  • Severe pain
  • Bleeding

While most cases might not involve the extremes of lye poisoning, this example shows the severity of phishing today. As a result, governments, states, businesses (big or small), and individuals should act accordingly to strengthen their cybersecurity.

Why Do Data Thieves Focus on Small Businesses?

The consequences of a cyber attack on a small business are particularly severe. In fact, 60% of small businesses that have been hit by a cyberattack end up shutting down within six months of the attack.

Despite the irreversible aftermath of falling victim to a cyber attack and the fact that 43% of online attacks are now aimed at small businesses, CNBC reports that only 14% are prepared to defend themselves.

Interested in some more statistics?

Cyber attacks are not only extremely expensive to recover from but they also damage your business’s reputation, productivity, and can even be dangerous in the event of personal data being stolen.

This is why it is crucial to protect your small business from cyberattacks. But how can you protect yourself? What can the Florida case study teach us?

How Can You Prevent Phishing?

Training

  • Training your employees: To be vigilant; educate them on common phishing traps, email scamming tactics, and how to send data securely (In the Florida case study mentioned earlier, the employee who noticed the breach reported it immediately)
  • Training IT: To know what to look for

Be sure to document your training and review it on a weekly or quarterly basis with your employees and staff.

Due Diligence

According to Security Scorecard, cybersecurity due diligence is “the process of identifying and addressing cyber risks across your network ecosystem.” Doing so provides “insights into potential gaps in network security so that they can be addressed before they are exploited by cybercriminals.”

For those who are interested in seeing where their business is at in terms of safety, read on to learn how you can measure your company’s cybersecurity risk.

Have a Planned Crisis Response in Place

When it comes to cyber risk, there’s nothing worse than being ill-prepared. Of course, we couldn’t write about cyberattacks without mention of investing in a cyber liability insurance policy for your business.

A cyber liability policy might include:

  • Data Breach Coverage
  • Business Interpretation Loss Reimbursement
  • Cyber Extortion Defense
  • Forensic Support
  • Legal Support
  • Coverage beyond a General Liability Policy

As a small business, it’s important you be prepared—because the consequences can be insurmountable. For more details, visit our full blog post on phishing or connect with our team today.

What to Know About Changes in Cannabis Insurance

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The cannabis industry continues to grow every day. With this, comes a new space for industry coverage. In this article, we’ll discuss changes in cannabis insurance; including how the industry has evolved, cannabis business insurance challenges, and how to insure your high-risk business properly. Let’s dive in.

How Has the Cannabis Industry Evolved?

As we previously mentioned, the public’s reaction to cannabis has shifted time and time again throughout history. Even just ten years ago, one might’ve laughed if you told them that in 2020, cannabis sales would hit an all-time record of $17.5 billion. In fact, from just 2019 to 2020, the industry experienced a 46% increase in sales, according to Forbes.

To put things in perspective, according to PropertyCasualty360, cannabis sales may reach up to $37 billion by 2024, which means “the U.S. legal cannabis market would still outpace annual craft beer sales and generate more revenue than toothpaste, hard seltzer, and the NBA combined.”

The decision of many U.S. states to have made cannabis legal today is still controversial on some level. 

While many people turned their noses up at cannabis being made legal, it’s interesting to remember that the drug actually “enjoyed a 5000 year history as a therapeutic agent across many cultures,” until the Marijuana Tax Act of 1937, which prohibited its use and sale.

The cannabis industry continues to evolve every day. 

With the now booming cannabis market, comes a new space for industry coverage. There are unique cannabis business challenges, which we will discuss below. If you’re interested, however, in the difference between cannabis and hemp insurance, read on here.

Cannabis Insurance

Challenges with Cannabis Insurance

One particular challenge of the emerging cannabis industry is properly insuring your cannabis business. According to Yahoo Finance, cannabis insurance “help[s] strengthen and legitimize marijuana-focused businesses. It protects them against:

  • Crime
  • Vandalism
  • Property damage
  • Other unfortunate events”

Insurance is essential to protecting any cannabis company as it minimizes liability and risk exposure. But that doesn’t mean it’s easy to find the right coverage.

“The good news is the cannabis insurance industry has come a long way in a short time,” says Ian Stewart, founder and chair of the national cannabis and hemp law practice at Wilson Elser.

“These days it is not so much about whether companies can obtain coverage, but more about what lines are available and the limits,” says Stewart. “The variety of insurance vehicles is expanding.”

These varieties include:

  • Property and casualty lines
  • General commercial insurance
  • Product liability

As the cannabis industry continues to grow, we gain a better understanding of how it works and it’s loss history.

More difficult coverage types to write for cannabis businesses, according to Stewart, include:

  • Employment
  • Cyber,
  • Errors and Omissions (E&O) policies
  • Specialty lines (i.e. crop coverage)
  • Auto policies (for companies who deliver cannabis products)

How to Insure Your Cannabis Business

Cannabis insurance falls into the realm of high-risk insurance. According to PropertyCasualty360, “insurers that provide coverage to cannabis businesses engaged specifically in selling marijuana can be criminally liable for aiding and abetting in the sale of marijuana or conspiring to violate the CSA — even when the business’s activity is legal under state law. Further, intrastate issues may also cause complications if marijuana is not regulated uniformly within a state.”

For these reasons, it can be more difficult to find proper coverage.


Legal cannabis companies require specific cannabis insurance expertise. Since the industry is still blooming, there are not as many experts as one would yet hope for.

The most important part of insuring your cannabis business is working with a knowledgeable insurance provider, one who understands the specific needs of your high-risk business. 

Depending on whether you’re a dispensary, cannabis manufacturer, cultivator, delivery business, physician, or so on, all of these branches face a different set of challenges, which, in turn, require different cannabis insurance policies.

These insurance policies, according to Embroker, might include:

  • General Liability
  • Product Liability
  • Commercial Property
  • Workers Compensation
  • Business Income Coverage
  • Cyber Liability
  • Errors & Omissions and Technology E&O
  • Crop Coverage
  • Commercial Auto
  • Cargo and Inland Marine
  • Loss of Income
  • The list goes on!

The steps to insuring your cannabis business can seem daunting. That’s why we recommend you enlist a trusted expert who has experience insuring this high-risk industry. This way, you can partner with someone who understands the specific needs of your cannabis business to create an effective risk management strategy.
Contact Brenda Jo and her team at Competitive Edge to learn more.

What’s the Difference Between a Surety Bond and a Contract Bond?

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The world of insurance can be complex. And for contractors, work can be dangerous, too. As a contractor, the question of what insurance you need to stay protected is likely to come up.

So, for starters: what’s the difference between a surety bond and default insurance? Which do you need to stay safe?
Today, Brenda Jo Robyn, founder of Competitive Edge Insurance, is here to give us the spiel, including the difference, benefits and risks, and what you need. Let’s dive in.

What is a Surety Bond?

There are three parties involved in a surety bond.

A surety bond is a contract where one party (the surety company) guarantees the performance of certain obligations in a contract of the second party (the principal or the insured) to a third party (the obligee).

When Do You Need a Surety Bond?

Surety bonds are needed for most licenses in the state of California and other states as well. Some examples of who might need a surety bond include:

  • Contractors
  • Real estate companies and agents
  • Financial institutions
  • Janitorial

Why Do You Need a Surety Bond?

Licensed bonds are required in many states to do business and are put in place by the state to protect the consumer.

The insured, or principal, purchases this bond in an amount prescribed by the state to pay the obligee (the state at this point), in case there’s a claim against somebody’s license.

What is a Contract Bond?

A contractor performance bond is a written contract that guarantees the performance obligations under a contract. Contractor performance bonds are used frequently in the construction industry but are also sometimes used in manufacturing and supply chains as well.

When Do You Need a Contract Bond?

It depends! Contractors can be required to have a contract bond for different parts of the process when they’re bidding a job, according to Brenda Jo.

What Is a Bid Bond? When Do You Need One?

Oftentimes a bid bond is required to submit a bid for a project. Typically, these bids are in the public arena for the states or cities. For example, the Department of Forestry.

“A bid bond lets this entity know that the contractor can provide a payment and performance bond should the job be awarded to them,” says Brenda Jo.

“If the contractor is awarded the project and the contractor decides that they cannot fulfill the obligation, the bid bond helps to pay for the difference in price that it costs to get a new contractor in.”

This leads to the next kind of coupling of bonds, which is the payment bond and the performance bond.

Payment Bonds and Performance Bonds

A payment bond guarantees payment for subcontractors and payment for materials.

A performance bond covers the ability of the contractor to perform and finish the job as per contract requirements. If the contractor doesn’t perform, the contract bond kicks in and helps to pay for the completion of that performance.

Bring in the Experts

An important note: For all of these bonds, if they’re used and there’s a claim on a bond, the contractor who purchased the bond has to pay that back, says Brenda Jo.

This considered, surety companies look for really strong financials in a company, including:

  • Assets
  • Lines of credit
  • Letters of credit

Surety companies look for anything that creates a picture that says you’re worthy of having a bond put into place—because if the bond is utilized and pays out, they need to know that the purchaser of the bond can pay that money back.

At Competitive Edge Insurance, we work with insurance carriers across the country to place all types of business coverage. We are always seeking out new insurance companies to write hard-to-place and high-risk business insurance.

Don’t let cancellation dissuade you from finding comprehensive coverage. We can help! Learn more by connecting with Competitive Edge Insurance today.

Additionally, for those interested in learning more, choose between our articles on the key differences between general contractors and construction managers and the difference between payment and performance bonds.

Understanding the Basics of Workers’ Compensation

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Workers’ compensation is an important part of business for any employer. Having workers’ compensation insurance helps protect both employers and employees, and is required by most states.

Workers’ compensation insurance can help recover an employee’s lost wages while they recover from a work-related injury or illness or even support family members if an employee is killed in a work-related accident. This type of insurance can be complex, so we’re here to help you in this article: “Understanding the Basics of Workers’ Compensation.”

What is Workers’ Compensation?

“Workers’ compensation is a form of insurance, paid by employers, providing wage replacement and medical benefits to employees who are injured during the course of working for the insured.”

These wages and benefits are provided in exchange for eliminating the employee’s right to file a lawsuit against their employer’s negligence.

Workers’ compensation benefits are designed to help employees if they are unable to work, cover medical expenses, as well as other expenses and rehabilitation costs associated with disability or illness. As you look to explore workers’ compensation options, it’s important to look for one that provides adequate coverage and compensation for your employees.

What Does Workers’ Compensation Cover?

Specific workers’ compensation coverage laws vary depending on your state. The most common compensation requires workplace injury insurance to include:

  • Payment for lost wages
  • Vocational rehabilitation
  • Permanent disability
  • Temporary disability
  • Medical costs and treatment 
Workers Compensation Basics

Who is Required to Purchase Workers’ Compensation Insurance?

Does every business need to purchase workers’ compensation insurance? The need for insurance falls on a state-by-state basis. 

In California, for example, “all employers must provide workers’ compensation benefits to their employees under California Labor Code Section 3700. If a business employs one or more employees, then it must satisfy the requirement of the law,” according to the California Department of Industrial Relations.

“State rules are typically based on the type of business entity you have (sole-proprietorship, partnership, LLC, corporation) and your total number of part-time and full-time employees. In most states, one or more employee will trigger coverage requirements,” according to Workers Compensation Shop.

Does My Small Business Need Workers’ Compensation?

Short answer? Most likely. Insureon tells us that for almost all businesses in the United States, workers’ compensation insurance isn’t optional.

“Small businesses typically need a policy in place as soon as they hire their first employee. Even when not required by law, this policy provides important protection against medical expenses and employee lawsuits related to workplace injuries.”

Don’t worry—Competitive Edge can help your small business find insurance.

If I Am a Contractor, Do I Need Workers’ Compensation?

When you’re a contractor, your work can take you anywhere! This is exciting, but also opens up a window of opportunity for injury or illness—which is a much heavier financial burden to carry when you’re flying solo.

Think about what an injury on the job might mean for your future or work. By investing in workers’ compensation, you can protect yourself from the exciting, but risky unknown that lies ahead.

For more on workers’ compensation for independent contractors, please read on here.

Why Is Everyone Talking About Workers’ Compensation Now?

With the arrival of COVID-19, many people wondered if the contraction of COVID-19, and thereafter the time necessary to quarantine at home, was compensable under state workers compensation acts. 

The answer to that question still remains unclear but is a topic of discussion. 

According to the National Council on Compensation Insurance (NCCI), “workers compensation laws provide compensation for ‘occupational diseases’ that arise out of and in the course of employment, many state statutes exclude ‘ordinary diseases of life’ (e.g., the common cold or flu).

“There are occupational groups that arguably would have a higher probability for exposure such as healthcare workers. However, even in those cases, there may be uncertainty as to whether the disease is compensable.”

Where Can I Get Workers’ Compensation Insurance?

From the State Compensation Insurance Fund (State Fund) or a licensed insurance company. In some cases, employers might be able to self-insure.

How Much Does Workers’ Compensation Insurance Cost?

The fast and hard answer: It depends! Rates can vary from carrier to carrier and from state to state. By comparing rates and working with a trusted insurance professional, like our team at Competitive Edge, you can find a carrier that best fits your needs.

Although cost is a big factor to consider, it’s also important to look at:

  • Services provided
  • What industry the carrier is in
  • Access to doctors
  • Access to the claims adjusters

What Happens if I Get Caught without Workers’ Compensation?

For employers who think the money saved by not investing in workers’ compensation is worth it, perhaps it would be beneficial to detail the extreme consequences of not having workers’ compensation.

Failing to have workers’ compensation is a criminal offense.

In fact, section 3700.5 of the California Labor Code makes it “punishable by either a fine of not less than $10,000 or imprisonment in the county jail for up to one year, or both.”

“Uninsured employers can be levied a fine of $10,000 per employee on the payroll at the time of injury if the worker’s case was found to be compensable, or $2,000 per employee on the payroll at the time of injury if the worker’s case was non-compensable, up to a maximum of $100,000.”

The bottom line: You can face up to $100,000 total if you are an employer who is caught without workers’ compensation insurance!

Employers who claim to have been “unaware” of the need for holding workers’ compensation insurance still face the consequences. Although obtaining workers’ compensation can be expensive, especially for those employers who frequently have claims made against them, there is no “savings” worth not having workers’ compensation insurance.

At Competitive Edge Insurance, we believe the first step is for your business to show us under the hood so we can help build your case to the carrier to get the right coverage at the best price based on your real-world conditions.

For more on how to prepare for employee claims and what you need to know about workers’ compensation for independent contractors, please read on here.

What to Expect from Changing Contractor Costs

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The global pandemic brought many changes to the construction and builders industry. Here’s what to expect in 2021.

Read more

EIDLs and Hazard Insurance: Your Full Guide

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When running a business, there are so many things to keep track of—especially considering the COVID-19 hullabaloo we’ve experienced over the past nearly two years. Various types of insurance, Small Business Administration (SBA) loan requirements… the list goes on.

An important topic that continues to change, however, is Economic Injury Disaster Loans (EIDL )and the subsequent need for hazard insurance. This brings up many questions, like 

  • How much does it cost? 
  • Why do I need it? 
  • How can I obtain coverage? 

Each of these questions and more is answered in this article: Economic Injury Disaster Loans (EIDL) Hazard Insurance: Your Full Guide.

Let’s dive in.

What are Economic Injury Disaster Loans (EIDLs)?

EIDLs are “the primary form of Federal assistance for the repair and rebuilding of non-farm, private sector disaster losses” administered by the SBA. “The disaster loan program is the only form of SBA assistance not limited to small businesses.”

An Update on EIDL

Over the summer, many small business owners received an alarming email from the EIDL program through the SBA.

As part of the EIDL requirements, you must have hazard insurance in order to apply for the EIDL loan. In the email from the SBA sent earlier this year, individuals were informed that those who had received the EIDL loan, must present proof of insurance in order to have their loans forgiven.

Here’s a look at what the email said.

The Email Stated:

“The SBA is launching a new round of EIDL Advances – called Targeted EIDL Advance – which provides eligible businesses with $10,000 in total grant assistance. If you received the EIDL Advance last year in an amount less than $10,000, you may be eligible to receive the difference up to the full $10,000. The combined amount of the Targeted EIDL Advance and any previously received Advance will not exceed $10,000.” 

Along with Information Claiming That:

“Businesses eligible for the Targeted EIDL Advance must meet ALL the following eligibility criteria:

  • Located in a low-income community, as defined in section 45D(e) of the Internal Revenue Code. The SBA will map your business address to determine if you are in a low-income community when you submit your Targeted EIDL Advance application.
  • Suffered economic loss greater than 30 percent, as demonstrated by an 8-week period beginning on March 2, 2020, or later, compared to the previous year. You will be required to provide the total amount of monthly gross receipts from January 2019 to the current month-to-date.
  • Must have 300 or fewer employees. Business entities normally eligible for the EIDL program are eligible, including sole proprietors, independent contractors, and private, nonprofit organizations. However, agricultural enterprises, such as farmers and ranchers, are not eligible to receive the Targeted EIDL Advance.”

The SBA said loans won’t be forgiven unless you have proof of insurance coverage. If you’re looking to check which COVID-19 loans are forgivable, visit this list.

EIDLs and Hazard Insurance

But Why Do You Need Hazard Insurance to Qualify?

“The Small Business Administration is a lender. Just like any other lender, the SBA is trying to protect their loan’s collateral from unforeseen circumstances,” says Naomi Bishop on hazard insurance. Therefore, all borrowers must obtain hazard insurance within 12 months of loan approval. Additionally, coverage must be maintained throughout the life of the loan.

Additionally, when applying for a loan, you guarantee a loan by offering assets as collateral. For example, financial (i.e. cash and cash equivalents), physical (real estate), vehicles, and so on.

If you then default on an SBA loan, the lender has the right to seize and sell assets as repayment. Even others’ collateral may be at risk if they signed a guarantee on the loan. For this reason, insurance is crucial to keeping your business and others safe.

More on Hazard Insurance

Under the requirements for the EIDL, the SBA requires that your business has hazard insurance to cover 80% of the loan amount. Hazard insurance is a term for coverage that may be included within several different types of property coverage. 

If you have any kind of business property insurance, you are likely covered. In fact, commercial property insurance is considered hazard insurance. This coverage protects your company’s physical assets, like buildings, furniture and equipment, supplies, computers, inventory, customer’s goods, signs, fencing, and even lost income from damage or loss. 

The SBA does not allow personal hazard insurance to be considered for loans. Business auto insurance is also not allowable coverage for this requirement.

What is Happening Now?

Effective September 8, 2021, many updates were made to the COVID EIDL program. All of which can be read in full here on the SBA website.

The impact of the primary policy changes include:

  • Higher loan amounts are available
  • Increase[d] use of funds flexibility
  • SBA automatically defers for 24 months from loan origination
  • Simplifies affiliation rules for all industries…
  • Created additional way[s] to meet program size standards… to include industries uniquely impacted by COVID-19 [that] continue to experience significant economic hardship
  • Introduces maximum cap on corporate groups

Do You Have the Right Coverage and Correct Amounts to Satisfy Your SBA Loan?

As previously mentioned, the SBA requires that at least 80% of your loan amount is covered with hazard insurance. It may be beneficial to have 100% of your business property value covered with hazard insurance. If you received EIDL funds without coverage, you should contact your insurance agent as soon as possible.

There are a few other rules related to the insurance coverage that the SBA has stated:

  • The insurance must be in the name of the business and must show proof of business property.
  • If someone is a sole proprietor, and they have a DBA (Doing Business As), the DBA must be on the policy.

How Much Does Hazard Insurance Cost?

The premiums that one pays for hazard insurance is dependant on several factors, including:

  • Selected limits and deductibles
  • Type of coverage
  • Where you live (some states are more prone to natural disasters than others)

Although this is not an end-all-be-all formula, for homeowners, the annual cost of hazard insurance typically costs between 0.25% to 0.33% multiplied by the purchase price of your home.

Hazard insurance doesn’t have to cost an arm and a leg. By comparing rates with the help of Competitive Edge Insurance, you’re sure to get the best deal for your business while making sure you stay compliant with the SBA’s requirements.

Curious about the difference between hazard insurance and high-risk insurance? Competitive Edge specializes in high-risk insurance— learn “What Classifies High Risk.”

How does Workers’ Compensation Insurance Work?

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Picture this scenario: You’re at a construction site and a worker falls off the roof and falls and breaks their leg onto floor tiles, also breaking the tiles. What would be covered in that situation, the leg or the tiles? 

What is Workers’ Compensation Insurance?

Workers’ compensation insurance are policies that provide medical benefits and wage compensation to workers injured on the job, in exchange for eliminating their right to file a lawsuit against their employer’s negligence.

Workers’ compensation benefits are designed to help employees if they are unable to work, cover medical expenses, as well as other expenses and rehabilitation costs associated with disability or illness. As you look to explore workers’ compensation options, it’s important to look for one that provides adequate coverage and compensation for your employees.

When you invest in a properly designed policy, it ensures you and your employees remain financially secure. It’s also important to look at the specific benefits that are offered within your policy. Typical workers’ compensation insurance policies cover medical benefits.

So, the worker’s comp covers the worker’s injury for falling off the roof. 

What is Covered with Workers’ Compensation Insurance?

Specific workers’ compensation laws vary depending on your state; however, the most common compensation states that require workplace injury insurance include the following:

  • Payment for lost wages
  • Vocational rehabilitation
  • Permanent disability
  • Temporary disability
  • Medical costs and treatment 

Bonds 

One helpful way to understand this scenario is knowing the difference between performance and payment bonds.

Payment Bonds

In simple terms, a payment bond enforces that everything must be paid once a project is completed. Payment bonds are also surety bonds and are required for most state projects based on the Miller Act. 

The Miller Act was passed by the U.S. General Services Administration Public Buildings Service (GSA) with the intention to explain how payment bonds protect subcontractors and suppliers.

The GSA responds to any reports of nonpayment, following the legal action needed and protected by the Miller Act. The GSA states that “the Miller Act requires that prime contractors for the construction, alteration, or repair of Federal buildings furnish a payment bond for contracts in excess of $100,000.” 

Payment bonds additionally play a major role in construction. As an insurance company, we have relationships with carriers who understand the specifics of construction risk and can provide better solutions, better prices, and more comprehensive coverage—even for hard-to-place and high-risk companies.

Performance Bonds 

The main differentiator between payment and performance bonds is that a performance bond ensures the employer is satisfied with the job. While both are surety bonds, performance bonds can be helpful in industries apart from construction. 

A performance bond, according to Investopedia, “ensures the completion of a project. Setting these two together provides the proper incentives for laborers to provide a quality finish for the client.” 

Any type of bonding will cover e tiles or building materials that were broken.

Overview

If an employee falls off the roof and hurts their leg and breaks the tile, the  Workers comp covers the worker’s injury for falling off the roof. Bonding covers the broken tiles from his attempt not to fall off the roof. 

The first step is to show us under the hood so we can help you find the right carrier and coverage to protect your business today and always.

Read about Worker’s Compensation for Independent Contractors here. 

What Classifies High Risk?

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At Competitive Edge, we specialize in high-risk insurance. We often get the question, “What is high-risk insurance, and how do I know if I need it?”

Well, the answer is, if you’re a small business owner, general contractor, or even car owner, you likely need high-risk insurance. Depending on the industry you’re in, however, it can be difficult to fund coverage or losses. 

There are a couple of ways to identify what classifies high-risk insurance. 

Risk Class

Investopedia defines risk class as, “A group of individuals or companies that have similar characteristics, which are used to determine the risk associated with underwriting a new policy and the premium that should be charged for coverage.” 

There are some main points that are needed to understand the risk that is associated with coverage: 

  • “An insurance risk class is a way for insurers to underwrite policies based on one’s belonging to a particular risk group.
  • People in each risk group will generally share similar characteristics that help insurers better estimate the chances that the policyholder will file a claim
  • Riskier risk groups will pay higher premiums—for example, people who are sick, older, or have a poor driving record.” 

Once you determine if you qualify for high-risk insurance, there are additional factors that will determine your premium. These might include: 

  • Age
  • Amount of coverage
  • Number of years the coverage is guaranteed
  • Risk class
  • And more!

Additional Classifications

One example of a scenario of hard-to-place insurance is from our very own founder, Brenda Jo Robyn of Competitive Edge Insurance. Brenda Jo had to pay an extra $15,000 in order to get her directors on board for her project.

If you have had excessive losses, shock loss, or are a startup (tech and service), it can be challenging to get professional liability coverage. There are, in fact, some extreme costs associated with high-risk coverage.

So, even the professionals have dealt with the difficulties and hoops that surround high-risk insurance (trust us, we get how frustrating it can be to navigate). That’s also why we’re here to help! 

Contact Us Today! 

Competitive Edge Insurance can help you perform a comprehensive review of all your risk exposure. 

Reach out today for more information from our experts on high-risk insurance! 

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WANT TO KNOW HOW MUCH YOU COULD BE SAVING ON YOUR INSURANCE COSTS?

WANT TO KNOW HOW MUCH YOU COULD BE SAVING ON YOUR INSURANCE COSTS?

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Competitive Edge Insurance

LIC #0H31982

P: 619-259-5459
F: 619-377-0144

830 Orange Ave Suite L Coronado, CA 92118

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