Jim Hoge wrote:
> Bill,
>
> Unfortunately, we live in a litigious society where no one is
> responsible for their own actions, we are all victims. That said, I
> am running into the insurance/ bonding issue with greater frequency.
>
>
> To the group, what is the easiest path to becoming insured and or
> bonded? From what I understand, bonding is typically per job and
> underwritten as a performance bond. I am grossly ignorant in these
> matters and it's probably time I took a good look at financially
> protecting myself as a climber.
You talk to your homeowner's insurance agent.. they usually know about
the stuff (especially if they also insure small businesses) or can refer
you to someone who handles the appropriate lines.
Bonding is usually, as you say, a performance or surety bond. It
basically guarantees that you'll finish the job, and that if you don't,
the buyer gets their money back (even if you spent it all on materials
and subcontracts). A surety bond is similar, for folks who handle
valuable property (e.g. cash, jewelry, etc.) or who are in a position
where there is risk of financial loss (a book-keeper, for instance). It
basically insures against them stealing or losing the cash.
Liability insurance is what you're probably looking for.. if you
accidentally damage something, etc. The actual probability of you being
responsible for a loss is fairly small (unless you're careless<grin>)..
What the insurance also pays for is a lawyer to respond when you get
named, along with everyone else potentially involved, when "something
goes wrong". A lot of times, it's just needing someone to write a
convincing letter that says, "my client is not responsible, and here's
why".. getting you removed from the wideranging list of (potential)
defendants.
There's also what's called (variously) Errors& Omission (E&O) insurance
or "professional liability" which is a bit different. This is insurance
against a professional making a mistake. For instance, if I screw up a
calculation or report for a client, and "something goes wrong" (oops,
that should have been AWG 2/0 wire, not AWG20), my E&O insurance is
covering it.
On the other hand, if I'm out soldering some wires for a client
(probably illegal in CA now, since I'm not a licensed electrician, just
a P.E.) and I start a fire and burn down the house.. that's regular
liability insurance.
Like all insurance, there's all kinds of inclusions and exclusions,
limits on certain types of damage, etc.
And, there's a huge difference in insurance rates for things one does as
a business or job and things one does as a private individual. It goes
to "exposure".. if you climb one tower a year as a private individual,
the probability of you having something bad happen is MUCH less than if
you do it 5 days a week, 50 weeks a year.
Once insured, then there's the whole thing of "named insureds" and
"insurance certificates".. the former essentially adds someone
(temporarily) to your insurance.. the latter says that you have
insurance.. Here's the difference..
Say I want to have a party at a park.. the city might require you to
have an insurance certificate AND post a bond. The former just says
that you have personal (or business) liability insurance, so if
something goes wrong, you'll have the means to pay for the damages. The
bond is like a security deposit.. if you vandalize the picnic tables,
they take it out of your bond. (A bond is where instead of you putting
up the full amount of cash, and getting it back at the end, you pay
someone else to put up the cash, and you pay them a fraction, which you
don't get back at the end... think bail and bail bonds...)
On the other hand, say you want to rent a crane. The rental yard might
ask you for a "named insured" certificate. If you drop the crane on
someone, and they sue the rental yard, they can collect on YOUR
insurance. (more to the point, your insurance will pay for their lawyer
to defend the claim). without the "named insured", if someone sued the
rental yard, the rental yard would have to sue you, and then your
regular old liability insurance pays the rental yard, who pays the
plaintiff..meanwhile the rental yard is out the cash to pay for their
lawyer. (which, inevitably, the rental contract says you're going to pay
for anyway...)
An hour sitting down with a small business insurance broker will be a
highly educational experience, especially if you go in with some
questions about how it all works. Everyone has to start somewhere,
typically knowing nothing, and that's what they do.
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