Table of Contents

So many people call asking about being bonded and insured that it feels like many use the terms interchangeably, that the ideas are one in the same. It surprises a lot of our customers that these are two very different things; they serve different purposes and can have different effects on your business.

Bonded License

A company or individual will get bonded to secure their license with the state or local government. The bond is used to guarantee their work. Should the bonded individual or company fail to act as per the rules and regulations of their license, the bond would pay out to make their effected customer whole again. There are a lot of businesses that are required to obtain this type of bond, take a look at our list of most common license bonds.

Contract Bonding

Much like the license bond above, construction bonds are there to guarantee something. In contract bonding it’s guaranteeing that a specific job is finished properly as per the contract. This type of bonding is typically referring to Performance bonds and you can learn more about what a performance bond is here.


Typically when someone is asking us about being Bonded and Insured the insurance aspect they are speaking of is a Fidelity Bond. Most commonly the questions come from people looking to have Bonded Employees in case of theft (Employee dishonesty bond) or Janitorial Insurance (Business Services Bond). Learn more about Fidelity Bonds and bonded employees here.

Surety Bond Vs Insurance: The Defining Difference for You

Who’s Being Protected?

Everyone is familiar with the insurance industry and how it works−an individual pays a premium and the risk is transferred onto the insurance company. With surety bonds the risk remains with the principle, and the protection instead goes to the obligee and your customers.

Who Pays for a Claim?

With insurance, the insurance company expects a certain percentage to be paid out in claims. In a Suretyship, these premiums do not cover losses, but are instead paid as “service charges” for the right to use the surety company’s financial backing and guarantee.

Think of it as a Line of Credit

Sureties view their underwriting as a line of credit, so their focus is on prequalification and the selection process. Because of this focus, not everyone will be bonded. The truth is, in today’s market it is getting more difficult to be bonded. If you fall into this situation because of poor credit, or you are a start-up company with no credit, please look at our Bad Credit Surety Bond Program. It may be just what you need to get up and running.

About the author:
Todd Bryant
Todd Bryant is a graduate of Germantown Academy and the University of Pittsburgh College of Business Administration Honors College. He has been President of Bryant Surety Bonds, Inc., an A+ rated Business with the Better Business Bureau, since 2007. Licensed as a producer with the Department of Insurance, he has been published in the National Association of Surety Bond Producers newsletter and on numerous authoritative publications such as The Washington Post,, and many more.

Still Have Questions?

Still haven't found the answer you are looking for?
Give us a call at (866) 450-3412 or leave your question below.