Insurance and Bond Laws in Wisconsin

by Lynne Haley Rose

Each state determines its own legal bonding and insurance requirements for the commercial industries operating within its borders. In the construction industry, this legislation is often referred to as a little Miller act," after the federal Miller Act. This act requires all contractors working on federal construction projects to furnish surety bonds that protect the government from losses should the contractor not perform as promised. The state of Wisconsin has specific statutes designed to protect businesses, the public, and workers from financial losses should problems arise.

Businesses Requiring Bonds

Wisconsin requires several types of commercial businesses to carry surety bonds. Some of these include trade schools and other private educational institutes, as well as vehicle dealerships. Financial institutions, including mortgage brokerages and banks, and fundraising organizations in Wisconsin must be bonded. Collection agencies, credit service providers, and debt management services must be backed with bonding as well. Construction contractors must be bonded as well.

Dwelling Contractors

Businesses must purchase bonds through a surety company that has authorization to conduct business in Wisconsin. Dwelling contractors have a choice of bonding amounts. Most can purchase a bond that covers a minimum of $25,000 in losses caused by any failures of the dwelling contractor to comply with Wisconsin law. Alternatively, if the contractor deems a bond in a lesser amount is more appropriate, the company must go through the state's credentialing unit and receive a restricted state contracting certification.

Insurance Requirements

While a bond protects those who use commercial services, insurance protects the business and its employees who provide those services. In Wisconsin, virtually all types of businesses must purchase workers' compensation insurance for their employees. Business owners must minimally insure all company-owned vehicles with bodily injury and property damage liability coverage, as well as uninsured motorist coverage. The state does not require businesses to carry standard liability coverage, but recommends it as a good investment against loss.

Fidelity Bonding

The Wisconsin Department of Workforce Development administers is a federally funded bonding program designed to protect employers who hire high-risk workers. For example, if a construction company hires employees who cannot be bonded through traditional means due to criminal history, past drug addiction, or a poor credit history, the Fidelity program will supply bonding at no charge to employers or employees. While not required by law, bonds issued through this program assist people in getting hired, and cover any losses, such as theft, that may result for employers.

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