E&O vs. Performance Bond in PA

Hello all! A few months ago I attended a NACHI seminar in Pittsburgh PA in which Bob Brown was the featured speaker. Briefly he touched on the subject of performance bonds. We covered a lot of ground in those two days but not near enough on that subject in my opinion. I still have questions. Is a “performance bond” the same as being “bonded”? I was left with the impression no. I am an inspector in PA. PA law requires us to carry E&O/liability with specific minimums. Can a performance bond be usd in place of these insurances? Is a performance bond “insurance” and accepted by the state of PA to perform home inspections? At the seminar in Pittsburgh the price of E&O was brought up (mine is $2800/yr.) This is when Bob suggested the performance bond because there is apparrantly a significant price difference. If anybody can answer any of these questions, shed some light on the subject or possibly steer me in a direction I would greatly appreciate the info. My E&O is up for renewal in a month and a half…:frowning:

I am no lawyer, but the law specificlly says E&O insurance and makes a point of specifying the amount of coverage.

I have to think there is a reason for that…-

A performance bond is a financial tool used to guarantee that in the event of an inspector missing something or is in default of the contract in any shape or form the bonding company would pay the judgment against the inspector if ordered so by a court of law.

If the bonding company does pay a claim, the individual bonded is responsible for the payment of the claim plus any legal expenses incurred by the bonding company. Bonding companies like real estate as collateral, and for good reason, in case you cannot pay for an eror or omission.

In PA you have to carry E&O insurance by law. Here is a NACHI deal on it: http://www.nachi.org/eo.htm

FREA is good too.

I have always had e&o here in WA state, though not required I thought the protection was a good idea. I have read that many inspectors are using a bond instead, which would be cheaper. I was wondering if anyone had any thoughts on that? Amounts of recommended coverage? Pros and cons?