When a company claims to be bonded, it indicates that the firm has obtained a bond through an insurance company. The amount of the bond is regulated by the government, and varies with the type of business. For example:
- An Auctioneer requires a $ 25,000.00 Bond
- A Siding company requires a $ 25,000.00 Bond
- A Cement Contractor requires a $ 10,000.00 Bond
- A Roofer requires a $ 10,000.00 Bond
In addition, any contractor that requests deposits in advance requires a Pre-paid Contractor's License through Service Alberta. The issuance of this license requires that the company be bonded, and the amounts vary with each application.
The Government has the authority to request a higher bond than required if there have been past problems with a firm. To ascertain if a company requires bonding, consumers should perform an on-line licensing search or contact Service Alberta in Calgary at 297-5700. To call toll free from anywhere in Alberta, first dial 310-0000 then dial 297-5700 at the prompt.
Under the Fair Trade Act, a claim against a company's bond may be issued for any of the following reasons:
- default
- negligence
- misrepresentation
- theft
- conversion
- fraud
To claim against a company's bond, consumers have a time period while the license is in effect, as well as a time period even after the license has been cancelled. Depending on the situation each company has different criteria. To determine the specifics, the consumer needs to contact the Provincial department of Government Services.
Insurance companies will normally provide a $5,000.00 bond with very little background investigating. The cost of a $5,000.00 bond is approximately $150.00 dollars. To obtain a $10,000.00 bond causes the insurance company to check the company more stringently, and the cost is approximately $200.00 to $250.00 dollars. A $25,000.00 bond is much more difficult to obtain, and likely any criminal record would cause the bond to either not be issued, or the cost would be so high, it would be prohibitive. In addition, the firm requesting the bond is required to produce strong financial statements, as well as financial records of the past business activity. If the record is not good, the bond will be refused.