Originally Posted By: mcraig
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I have several friends that have approached me about low priced bonds to meet the AZ state requirements.
I want to help everyone in one shot so here is the answer to the issue in states that don?t require E&O insurance. If you are serious about starting up a HI business you have to do it in a professional way. First off what I tell everyone is to form an LLC (Limited Liability Company) this basically separates your personal property from your business. Then you need to get your Bond, before you get your bond check around for a bond that will not ask for personal property for collateral (such as your house and your Spouse?s information) Your low price bonds ask for you to use your personal property for collateral, If you get one of these you have just defeated your LLC If anyone take legal action against you, you can loose your property and even worse a good lawyer will tie your personal property to your business and you will loose everything you have. If you don?t have a bond that ties your personal property to your business you can?t be personally sued you cant loose anymore than your business assets. Next off put a Lawyer on a retainer to represent you if needed you will find this cost around a forth of what your E&O insurance cost annually. Now here is how it works if some one is mad at you they go out and get a lawyer the lawyer they hire will not take a case that won?t pay them big bucks the first thing a lawyer looks at is if you have E&O insurance if you do he sends out a threatening letter to your E&O (he knows there is a chance of a large settlement with out a fight) then your E&O drops you or raises your rates (you loose know matter what) Now if you don?t have E&O and are a LLC the lawyer checks your bond in AZ it needs to be $25000.00 then he sees your are a LLC and that he won?t gat anymore than your company assets ( another $25000.00?) This is not worth his time to take this case he won?t make big bucks even if he wins. So he tells the Customer to take you to small claims court small claims court has caps on what you can win (Under $5000.00) now to take you to small claims court he has to sue your LLC. Now say you go to court you get to defend your report before a judge not a jury and there are no lawyers in small claims court you have a vary good chance to win (if you are a professional) If you loose there is a strong chance that the judge won?t award them anymore than the cost of the inspection so you pay them back the price of the report and you keep your business and your bond is unaffected and you are done with paying out anymore money to anyone.