comparison of bonds & safe
How does bail insurance work?
A bond protects the owner of the project (called a creditor). If the project is not done according to the terms of the contract, then the owner can make a claim against the bond and have the project terminated (usually by another contractor). the bond will then seek to be reimbursed for any loss by the original contractor.
Reading: What insurance company bond bonds
There are many bail bonds out there. some of these bonuses are found in some serious niche industries. however, a good bond (or bond) can really reduce the amount of risk to your business. These risk mitigators, along with specific types of insurance, can really be beneficial to your overall financial well-being.
See the article below for some great advice on the difference between a bail bond and e&o insurance.
how protected is your business? learn how to safeguard it with bonds and e&o insurance
When I started my independent career, I thought it would be a piece of cake (isn’t that the case for everyone?). once I got into the thick of things, I noticed that every question I got an answer to only made me ask 10 more questions. sound familiar?
This is commonplace for anyone starting a business for the first time. one of the most confusing things for me at first was understanding what it meant to be “bonded and insured”, or at least the difference between being “bonded” and “insured”. I knew of both, thanks to my commercial career, but I didn’t fully understand each one until later in my independent career.
I have to admit I had both a surety bond and insurance (errors and omissions insurance, or eoi for short) before I fully understood the purpose of each. luckily i have never had to use either but will continue to have them to protect myself and my business. I hope I can help you here by giving you my understanding of each.
bond insurance
bail bond insurance isn’t really a thing. instead, the two terms are often juxtaposed. bonds are made instead of having insurance. the reason for this is that it is a guarantee that the work will be done on time.
a good example: in our neighborhood, there was a big development going on. the general contractor ran into some problems and lawsuits ensued, delaying the project about five years. there was a lot of insurance on the project, but that didn’t stop lawsuits from delaying the project.
insurance risk
A bond would not prevent litigation. however, the project would not have been delayed for five years since the bond would have prevented the works from being stopped. that’s why everyone wants them, it means that the whole project will go ahead.
errors and omissions insurance arrives
Who cares about errors and omissions insurance? actually, that’s the kind of attitude that would require someone to have eoi. It was a co-worker who convinced me, and I’m glad he did. he and I were doing countless background checks on potential employees: over 4,000 of them.
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He explained to me that having eoi would protect individual investigators in case they did something wrong on a background check (for example, made a “mistake” or “omitted” something in the course of their work).
and that’s exactly what eoi is. it is an insurance coverage that pays in case of professional negligence. It is used by countless professionals, from freelance writers to doctors and lawyers. I didn’t get eoi again until a few years ago when I got involved in online marketing.
After getting my own legal advice, I decided it was best to have him. So here I am, after years of working for the government, but with a policy that protects me professionally.
surety bonds vs errors and omissions insurance
It seems that bonds and insurance are the same thing. However, this is not the case. So now that I’ve bored you with my personal stories, let’s get to the heart of the matter. what is the difference between a bond and an eoi?
let’s start with the bonds
There are normally three parties to each transaction. the first party is you (the principal), the second party is the person you contract with (the obligee) and the third party is the one who pays (the guarantee) in case there is a claim.
There are many types of bonds depending on the profession, but basically the “bond” will pay the “obligator” in case he defaults on his agreement. here are some examples:
A warranty pays for damage caused by an electrician who did not follow code and caused damage to a home. a mining company does not implement reclamation procedures after extracting a concession; the bond will end up paying for the cost of cleaning the area. a bail bond post a bail for someone in jail; if that person does not show up for her court date, the surety will forfeit the bail money to the court. There are numerous types of bail bonds, and I could list many more examples, but I’m sure you now have an idea of how they work.
now let’s take a look at e&o insurance
eoi is professional civil liability insurance. what eoi does is protect you from liability for negligence. It works similarly to a surety bond, except that eoi protects the policyholder while the surety bond protects the person receiving the service.
here is an easy way to remember it; Please note that this is just an example and each situation needs to be evaluated individually:
Let’s say you’re a notary and you don’t certify a document correctly. as a result, the person who hired him loses real estate that he wanted to buy. A bond would pay the signer for any damages resulting from his mishap. now, in the event that person sues you for negligence, eoi will help cover any damages awarded in court.
here are some examples of eoi claims:
An architect is sued for failing to calculate correctly, causing a company to halt construction once the mistake is realized. accountant makes a mistake in calculating someone’s business income. The person is then audited by the IRS and sues the accountant for the mistake. A lawyer gives legal advice to a client that turns out to be false, and the client sues for damages caused by acting on that advice. if you’re still confused, this is the easiest way to remember the difference. Bonds are meant to protect the obligee, while eoi is meant to protect the principal. if something bad happens, bail pays the victim, while insurance will pay you if the victim sues you.
cost of bonds and eoi
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Calculating the cost of bonds versus eoi is very different. For errors and omissions insurance, the cost has pretty much become standard over the years. you can base the cost on the amount of coverage you’re looking for within the industry you work in.
Unlike insurance, bail bonds are individually determined by risk and there can be a wide range of prices depending on your profession. the cost of a bond is determined by your personal conduct. expect a credit check when you apply for a bond, as how you handle your financial obligations is an important factor in calculating your rate.
For bonuses, someone is taking a chance on you doing what you’re supposed to do. if you have a history of not following the rules (like the people in the examples I used above), expect to pay a higher rate.
Basically, you should know that the cost of eoi is roughly the same no matter who you are, while bonuses can vary based on your personal behavior.
bail bond insurance coverage
what does bond insurance cover? covers the loss associated with one of the parties that does not comply with the terms of any contract
summarizing
bail bonds and eoi may seem similar, but there are some important differences that set them apart. The basics to remember are that EOI pays if you have to pay for your negligence, while a bail bond pays someone you harmed as a result of your conduct. calculating the cost of each is also different.
do you need them? no comment from me. but at least now you can better understand each one, which will help you make that decision.
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