Thread: Bonding Insurance

Has anyone heard of Bonding Insurance for Inspectors? I've been asked a couple of times if I was bonded. I can find dishonesty insurance in respect to protecting a business from its employees. But, I haven't seen anything like a personal bond to assure clients that I'm an honest guy at least up to the limits of coverage.
Stu

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Stuart,

I haven't heard anyone being bonded in years myself.

Years ago when I first went into business I was told by a in$urance provider that you could "bond" employees but not the actual owner. Maybe things have changed over the years.

rick

If things have changed, I can't find where. I think this is primarily coming from real estate agents who are thinking about ads run by Contractor/Inspectors where they may throw in a line about how they are a licensed contractor, bonded and insured. But except for the big guys, Contractor Bond Insurance is, from what I have seen, a strictly per contract issue. Here in Virginia, inspectors aren't licensed and there's no bond requirement. There is a "voluntary" state certification for home inspectors that requires carrying $250K liability insurance.

Stu

Originally Posted by Stuart Brooks

Has anyone heard of Bonding Insurance for Inspectors? I've been asked a couple of times if I was bonded. I can find dishonesty insurance in respect to protecting a business from its employees. But, I haven't seen anything like a personal bond to assure clients that I'm an honest guy at least up to the limits of coverage.
Stu

Stu,
I think there is a confusion of terms here. In Alaska, HI's must post a bond, presumably because we are under the same statute as contractors who must be bonded. Most of us have a CD made out to the state so we are getting interest on the money they are holding. There is no relation to "insurance" in this bond which the state could withhold to pay a claim that might be filed against us. We must also have general liability insurance as a separate requirement. So, Bonding AND Insurance are required, not "Bonding Insurance."

I get my E&O from FREA. I know they do offer Fidelity Bond insurance (aka honesty bond) that protects your client from theft of property while you are at the house. It's $75.00 for $5000 coverage or $135 for $10000 coverage. I assume that is per year. Either policy has a $100 deductible. However, just like E&O, there is always the risk that if someone knows you have the coverage, they might make a claim. You never can tell when an angry seller might steal their own jewelry or whatever.

I hate it when sellers leave a bunch of valuable jewelry or cash or whatever just lying around. I am as honest as they come but if you are last man in at the property and something turns up missing (whether it actually is or not) all fingers will point at last man in.

The way things are going in Texas with inspector insurance right now it would not surprise me if they require that we purchase Bond insurance as well.

Eric

Originally Posted by Eric Shuman

Fidelity Bond insurance (aka honesty bond) that protects your client from theft of property while you are at the house.
I am as honest as they come but if you are last man in at the property and something turns up missing (whether it actually is or not) all fingers will point at last man in.
Eric

Eric,
Yes that cost is per year. I've heard there is not a payout unless there is a conviction.

Some view BONDED as part of feel good Marketing.

I put Time arrived at Inspection, Time departed: Who was on site in the Report. If it's a Gated Community stop at check in and request to be logged out instead of waving as you drive by.

Some view BONDED as part of feel good Marketing.

For those who agree, we launched InterNACHI's $10,000.00 Honor Guarantee. - InterNACHI

Bonding is cheap and should be easy to get. What you are looking for is called a fidelity bond. They are just about as useless as sweet tea at a diabetic convention!

The public and most home inspectors have a big misconception on bonding, GL and E&O. A Fidelity bond basically gives your clients a resource to go to if you steal the family silver or grandpas gold watch... The kicker as with all insurance is in the fine print, a person must be convicted for the bond to pay. They the bond (insurance) company will subjugate you for a refund of the amount they paid.

Just get GL and E&O and you really have no need for a bond.

I used to get 'Bonded' years ago when I was a contractor. Easy, cheap, no big deal. Commercial clients wanted it. As Scott mentioned, not really worth the paper its written on. Never had to use it.
Oddly enough I actually had someone ask me if I was bonded about 6 months or so ago. First time in more years than I can remember. Guy was horrified that I wasn't. Didn't get the impression he knew what he was talking about. Appropriate though considering he was one of those know it all types.

Scott totally misunderstands the purpose of it. Heavens to Betsy, it is not to cover your client if you are a thief!, although it does that too. It really has two purposes. The first is to satisfy the many commercial inspection clients who demand it. The second is website marketing. InterNACHI's $10,000.00 Honor Guarantee. - InterNACHI It's free for members of course.

As Markus says, only a Dufus would ask the question. Do they think you'll steal stuff while they're away? Then they should put their valuables in a safe place. What about all the buyers that have traipsed through their home, were they all bonded?
I've had home owners stay in the house while I do the inspection, they're the suspicious types, I guess. They relax when a realtor shows up. That's a funny one.
I've had sellers insist that the listing realtor be present during the inspection to keep an eye on things. Whatever. I just ignore them and keep my info out of sight, then find a private spot to write it up.
Will a client, usually a home buyer, be worried about bonding? It doesn't even cross their minds.

To answer the question, I say I am insured and licensed and I do this every day. If the home owner is there to let me in, I hand them a printout, biz card and brochures.

Although a Fidelity Bond is one type of Surety Bond, they are not the only type. Performance Bonds, and suppliers/sub payment bonds are yet another (contractor types also referred to by other posters). If you are paid and fail to inspect and/or deliver report - a performance type bond surety/indemnity might reimburse your client, for example, that fee should you fail to perform/complete."Bonds" are issued by a third party surety, although some insurance companies may have a surety issuer, they are not (bonds) "insurance".

In unlicensed states, such as Virginia (which has a voluntary self-affirming "certification" program, but it is in no way required to be certified as a home inspector, just to use the modifier "certified"; nor does the commonwealth perform criminal background checks prior to issuing "certificates" or renewals, reliant only on a self-affirming statement and requiring certificate holders to self-report criminal convictions), it would be not irregular to request or inquire as to the "bonded" status of a self-employed Home Inspector, or for that matter, for the multi-employee home inspection firm. A great many insurance underwriters exclude coverage for criminal acts including driving under the influance.

However, not specifying the multitude of distinctions and differences amongst surety bonds, and OTHER bonds (such as self-insured workman's compensation bonds, oh, and for those who may not be required, or may self-exclude from such evidence that the self-employed HI have such coverage which includes him/herself) is not all that unusual.

Especially for the consumer or property owner who has already engaged a RE attorney to consult in a pending or potential RE transaction, or who has had a "liability exposure" discussion with their personal lines insurance agent, and/or their financial planner; especially those individuals with complicated financial/business exposures, assets, future of earnings, and "something to protect and/or plan for" (retirement, support of spouse, children, etc.).

Some states who license, register, or certify HIs may also incorporate a bond of sorts as a part of the licensing, registration, or certificate fee. Some require criminal background checks, credit reports, searches of civil records, etc. most do not, but may suspend or revoke should the entity or agency learn of a particular class or type convicition, failure to pay child support, insured student loan payments, or make good on a governmental debt, or maintain certain types of INSURANCE (not bond) at certain cumulative or occurance minimums.

More and more home owners are inquiring about criminal backgrounds, identity checks, as well as civil actions (both BY individuals and filed AGAINST individuals), and financial histories; prior to allowing individuals onto their properties, or into their homes. Financial crimes, identity theft, insurance scams, as well as exposure should a party cause damage, become injured, have an accident, etc. while on their property as an "invitee" and especially if in a contracted or employed capacity, even as an "agent" of another. Travel to and from and presence during contracted though you may be, a corporation though you may be, you are in the employ of another - that "another" also has "exposure" especially in areas excluded by whatever "insurance" you carry, manditory or not. Depends on the state, region, and federal district decisions, etc and in Virginia, might be the city court decisions which influence.

More and more property owners (especially professionals still looking forward to future earnings and capacities) engage in consulting discussions with advisors prior to placing their property for sale, etc.

Ever aware of the litigiousness of our society - looking for "pockets", the "deeper the better" and "the more, the merrier", as well as personal protection and safety of ones belongings, dwelling, property, and one's family and person. With the directions our system has taken, the client becomes increasingly responsible for your actions and activities in/on the home/property, on the area surrounding, and on the way to and from the property address. Looking for an imdemnity (a guarantee or payor other than yourself or the limited provisions of your particular insurance policies) isn't really unusual at all.

Not all that long ago, IIRC: a pre-purchase or may have been a pre-listing HI and radon testing indv. was criminally charged for having "planted" secret cameras and broadcasting privacy-invasive, intimate images via the www. A HI accused of sexually assaulting his female client during an unattended by others inspection. An HI accident during an inspection resulting in both property damages and injuries to occupant, HI and client. An HI fatal health issue preventing delivery of report in a timely enough manner to meet deadlines of contingency, engaged in a performance lawsuit by sellers attempting to force sale that buyer belatedly attempted to withdraw from purchase offer with cross complaints between "buyer" and the estate of HI and insurer. An HI charged with being under the influance of perscription narcotics operating a motor vehicle, allededly running over a school aged "latch-key" child returning home from school, walking on the public sidewalkway which crossed the driveway of the home "he" just inspected. Etc.

Its more than one's word being one's bond these days.

Originally Posted by John Kogel

As Markus says, only a Dufus would ask the question. Do they think you'll steal stuff while they're away? Then they should put their valuables in a safe place. What about all the buyers that have traipsed through their home, were they all bonded?
I've had home owners stay in the house while I do the inspection, they're the suspicious types, I guess. They relax when a realtor shows up. That's a funny one.
I've had sellers insist that the listing realtor be present during the inspection to keep an eye on things. Whatever. I just ignore them and keep my info out of sight, then find a private spot to write it up.
Will a client, usually a home buyer, be worried about bonding? It doesn't even cross their minds.

To answer the question, I say I am insured and licensed and I do this every day. If the home owner is there to let me in, I hand them a printout, biz card and brochures.

Did Markus say that? Dufus?!? I must have missed that. I know you did say it though, I quoted it, still reads that way 45 minutes after you edited it.

Seems to me not all that long ago John Kogel, you were asking if it was "okay" to modify an electrical panel you were looking at during an inspection (IIRC - couldn't quickly find at the moment: removing what you believed to be a bonding screw, in the belief that doing so would "insulate" and/or complete a modification of service equipment used as a downstream panel, or something to that effect).

A Bond may be in lieu of PROOF of sufficient personal financial responsibility. A Bond may be protection for the client should you be engaged in a fraud/scam. Insurance, in general, doesn't pay out should you engage in a criminal act (intent). Often professional insurance disclaims actions, or activites outside the scope of the particular profession. Manytimes insurance specifically excludes certain activies, or areas from coverage. Your fee is miniscule compared to the financial exposure to the client. A Bond might be to protect the Developer, his contractors, his subs, and individual employees should your inspection or non-inspection activies at a job site cause damage or injury to the workers present your your own self-employed worker's compensation exempt from required participation personhood (U.S.), delay performance at the job site, risk completion of permitted project, which are bonded. A bond; surety, imdemity, or otherwise: could pertain to a whole lot of different things.

Real Estate Agents/Brokers are another story entirely, as is their responsibility for the actions of their "clients" while touring a property - depending on the contract regards the listing - and the laws of the state or commonwealth. AFAIK all states regulate Real Estate Agents and Brokers, including criminal background checks; and most, if not all do the same with attorneys, insurance agents, and locksmiths.

Originally Posted by Lisa Endza

Scott totally misunderstands the purpose of it. Heavens to Betsy, it is not to cover your client if you are a thief!, although it does that too. It really has two purposes. The first is to satisfy the many commercial inspection clients who demand it. The second is website marketing. InterNACHI's $10,000.00 Honor Guarantee. - InterNACHI It's free for members of course.

Lisa, only an idiot advertises that they have insurance and bonding! Insurance is not a marketing tool and anyone who thinks it, is an idiot!

Most large commercial projects require project specific insurance and not a measly $10K bond.

Most large commercial projects require project specific insurance and not a measly $10K bond.

Scott, you are confusing insurance, surety bonds and fidelity bonds. They are three very different things. For example, ComInspect has the BoA contract which requires the ComInspect inspector to have a 10K bond, because they are working inside office and retail space, but doesn't require them to carry E&O insurance or post a surety bond.

Originally Posted by Lisa Endza

Scott totally misunderstands the purpose of it. Heavens to Betsy, it is not to cover your client if you are a thief!, although it does that too.

Lisa How much does nick pay you to come on this site and talk down the members on this site and members of other HI orgs 24 hrs a day 7 days a week?

Not enough.

Originally Posted by H.G. Watson, Sr.

Did Markus say that? Dufus?!? I must have missed that. I know you did say it though, I quoted it, still reads that way 45 minutes after you edited it.

HG, you take the posts literally and read what you want into them. Markus says the guy did not seem to know what he was talking about. My edits are usually to add something. Sometimes to correct an error. I don't wish to leave erroneous material floating around in cyberspace.

Originally Posted by H.G. Watson, Sr.

Seems to me not all that long ago John Kogel, you were asking if it was "okay" to modify an electrical panel you were looking at during an inspection (IIRC - couldn't quickly find at the moment: removing what you believed to be a bonding screw, in the belief that doing so would "insulate" and/or complete a modification of service equipment used as a downstream panel, or something to that effect).

Yep. I thought it was a subject that would lead to a lively and educational discussion, nothing more. Never said I intended to modify anything, just asking for opinions about taking actions during an inspection. The bonding screw had been left in by mistake, no doubt about it.

Now back to bonding of people.

Hey, I just love a pun, probably an affect of my advanced years.

AFAIK a fidelity bond is one of a number of types of bonds in the surety bond category.

Frankly, IMHO "Lisa" is paid far too much. Strange whenever another Gromicko and associates new Ad appears the personalities revive themselves for frequent postings.

The timing of B.G.s recent activity, and the G.W. "activity" along with the new Ad banner, with L.E. showing up yet again, hasn't gone unnoticed.

I'm wondering what a section sponsorship and banner actually costs...wonder how much it would take "donation-wise" to quash those oportunistic freebie coat-tailers. I can't take it with me, I know (, but the Mrs. may have other ideas -- since she's statistically prone to outlast me -- I'm determined to be the exception to prove the actuarial rule, or so I tell her!!).
(H.G.) W.

Originally Posted by Lisa Endza

Scott, you are confusing insurance, surety bonds and fidelity bonds. They are three very different things. For example, ComInspect has the BoA contract which requires the ComInspect inspector to have a 10K bond, because they are working inside office and retail space, but doesn't require them to carry E&O insurance or post a surety bond.

Hi Lisa, No confusion on my part. I have purchased both types of bonds for various commercial jobs over the years that have required them and I maintian E&O. I can't say I have ever heard of ComInspect so I can't comment on them or BoA whatever that is.

If a person thinks that a fidelity bond is going to increase their business then they are either very new or are listening to a person who does not know what they are talking about.

[QUOTE= I can't say I have ever heard of ComInspect so I can't comment on them or BoA whatever that is.

If a person thinks that a fidelity bond is going to increase their business then they are either very new or are listening to a person who does not know what they are talking about.[/QUOTE]

I believe the person that believes nickos bond stuff would be the same person that believes Cominspect is the only way to inspect commerical buildings.