If I am bonded, do I also need to be insured?
I am starting a pet care business where I go into other people's homes. I will care for their pets mostly while they are on vacation, at work or out of town. Some of the other services are available while they may be home.
The terms "bonded" and "insured" are frequently misunderstood. While bonding is a type of insurance and each involves coverage for a financial risk or loss, the types of losses covered are generally different. Bonding usually refers to a type of guarantee that a specific project, service or action that you have agreed to provide will be financially covered if your performance is not complete or satisfactory, in which case the bonding company will reimburse the customer for the loss. Insurance, on the other hand, usually refers to financial coverage for risk of loss or damage to a tangible item, such as your car, your home, your body (personal injury) or your life. Insurance would also cover the merchandise that a company manufactures and ships. Errors and omissions (E&O) insurance, on the other hand, is more like a bond because it provides coverage for acts performed or not performed, in contrast to protection for risks to a specific item. You should discuss your specific needs with your insurance agent or other financial advisor. It would also be a good idea to speak with an attorney.
Nina L. Kaufman, Esq. is an award-winning New York City attorney, edutainer and author. Under her Ask The Business Lawyer brand, she reaches thousands of entrepreneurs and small business owners with her legal services, professional speaking, information products, and LexAppeal weekly ezine. She also writes the Making It Legal blog.