BILL CHERRY'S GREATEST DALLAS PARK CITIES REAL ESTATE BLOG: HIS WORD IS HIS BOND.

HIS WORD IS HIS BOND.

 

While rarely meant to be, often times the assurance that a company is BONDED is, instead, pernicious.

I'm referring to the insurance term, to bond, which means a financially responsible third party is willing to step in and assure completion of a failed contract between or among two or more other parties.

Often times, a contractor, repair service or another party will advertise that they are "insured and bonded." In reality, the likelihood that they are actually bonded by a licensed bonding company is nil.

Bonding insurance is expensive, primarily because the insureds have a higher than expected failure rate.  Contractors often charge their clients the cost of the bonding premium if the client requires a performance bond.

Most government entities require contractors they used to be bonded. Lenders do, too, to secure large construction loans.

Wills and trusts, more often than not, specify that the executor, administrator or trustee will not be required to provide a bond covering damages should he be sued by the beneficiaries for failure to follow the terms of the will or trust.

Bonds for non-professional estate administrators are very costly because the likelihood of a suit is very high.

Oddly, that is reason enough to appoint a bank's trust department to administer the will or trust. They are bonded, and that, in itself, assures that the terms of the will or trust will be properly executed.

The other day I found a lawn care's business card in my mailbox.  As expected, it said the service was "bonded and insured."

In reality, the chances are almost 100% that the service is not bonded, and there is almost an equal likely it carries no Workman's Compensation or Liability insurance.

Finally, I've often thought about the expression, "My word is my bond." That must have originated as a hopeful replacement for the reason a contractor didn't plan to provide his client with a third-party performance bond.

 

BILL CHERRY, REALTOR
Since 1966

Dallas

214 503-8563

 

 

 

 

Comment balloon 0 commentsBILL CHERRY • June 30 2017 03:16PM

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