Why Insurance v/s a Bond?
A bond protects the public, suppliers and taxes liens. If you breach a contract, fail to perform services which you have been paid for, and/or fail to pay an account which services were obtained, the bond could be liened. When the bond company pays out damages, this value must be paid back to the bonding company. Hiring an attorney to defend the suit could cost you over $4,000.00 in costs to you and you still need to repay the bonding company.
An insurance policy has a limit of coverage which will be available for defense and damages. You pay a little and the insurance company pays up to the limit of coverage. This limit is typically $1,000,000 for an occurrence. The damages paid out by the company will not be required to be paid back. You may have a deductible required per the policy conditions and that’s it.
Last revised: Date 10/07/2008