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Discussion in 'Lawn Mowing' started by jasonp, Feb 20, 2001.
Just wondering if there is a difference in the two.
Yes. Briefly - insurance protects you against loss of your property or services. A bond protected you in case some one files a claim against you. For instance, a worker who goes into a person's home will usually be bonded in case the owner says the worker stole something. In some states, you can file a bond instead of carrying insurance. Someone else can probably give a better explanation, but I think that should cover the basics.
BONDED also means: in relation to commercial contracts.
IF you are awarded a commercial contract. You fail to perform or do a sorry job. The contractee can collect from your bond company. It could be the price of the total contract or the fees associated with paying the new contractor. (This is very common with government contracting usually over 100K)
Example: You bid on a 100K contract and it requires a bond. You fail to complete the work because it's overwhelming or you underbid the job.
You only completed 10K worth of work. The agency can claim failure to perform. They go after your bond company for 90K. This 90K will go towards paying another contractor. It's a bummer.
So be careful when you are bidding on a contract and it requires a performance bond or a bid bond. Read everything and consult your attorney.
That's why it doesn't pay to be a lowballer. Because it can really destroy your funds and drive you out of business.