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E&O vs. Bond, not James


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Saw someone mention using a bond as opposed to E&O for beginner inspectors due to the low cost of a bond vs. high insurance.

I have investigated several E&O plans and rates vary from $2,500 to $3,900 - deductible is the big factor in price ($5K vs $1K).

Anyway, can someone tell me a little more about using a bond for coverage?


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Oy, no.

A surety bond is not even close to the same thing as E&O.

Let's say you make a mistake and someone sues you for 100,000. With E&O, you pay a deductible and they take it from there. They'll pay for your defense and pay any judgment against you. When it's all done, you're only out your deductible. Of course the insurance company might then raise your rates or even drop you, but you're not financially ruined.

Now, with only a bond, there's no deductible but you get to defend yourself and, if there's a judgment, you have to pay it. If you can't pay it, the bond company pays it for you. But then you have to reimburse the bond company. Trust me when I say this: you'd be better off owing the money to Tony Soprano than owing it to a bond company. They *will* make you pay it back.

-Jim Katen, Oregon

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