Bonds are considered a special form of insurance, but are different from insurance because the beneficiary is a third party. Bonds are used to guarantee the performance or honesty of someone else.
Fidelity Bonds guarantee that bonded employees handle their employer’s money and property honestly. A typical fidelity bond covers losses by theft, embezzlement, forgery, misappropriation, or any other dishonest or fraudulent act. Examples are Janitorial Services Bonds, Employee Dishonesty Bonds and Pension Trust (ERISA) Bonds.
Surety bonds guarantee that a job will be done. There are many types of surety bonds. Contract bonds ensure the fulfillment of a contract. Performance bonds guarantee that a job will be completed to the specifications in the contract. Payment bonds ensure that the contractors payments to employees, suppliers and subcontractors will be fulfilled in the event the contractor fails to pay.
Contact Mike with any questions you have about bonds for your business.