We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What is the Difference Between Bonded and Insured?

Mary McMahon
Updated: May 16, 2024

Bonding and insuring are both forms of protection against financial loss, but they work slightly differently, and in some industries, people may be bonded and insured so that they are thoroughly covered. In both cases, the coverage involves making regular payments to a third party, known as a surety in the case of a bond and an insurance agency in the case of insurance. This third party is responsible for making a pay out in the event that a claim is made.

Bonds protect specific jobs, providing coverage if the job is not completed to satisfaction. If a bonded contractor abandons a job in the middle, for example, the contractor's client could make a claim to be compensated. Bonds also cover things like damage caused by a moving company, theft by a house sitter, and other problems related to the satisfactory completion of a job.

Insurance covers against specific types of losses. For example, if an insured electrician accidentally damages the electrical supply to a neighboring building, causing lost work time, his or her insurance would provide compensation. A bond would not cover this, because the incident would not be related to the completion of the electrician's job. Insurance covers liability issues that may arise in the course of someone's work, but unlike a bond, it will not necessarily cover a job which is not performed to satisfaction.

Being bonded and insured can be a big advantage for people in some industries. Housecleaning services, pet sitting companies, moving companies, and other people who work in and around the homes of their clients often have both to provide full financial coverage. Individuals who work on government contracts are often required to be bonded and insured to minimize the financial risk to the government.

Some insurance companies offer services that are very similar to bonding, which may make this type of coverage unnecessary. People should consult financial advisers and insurance agents to determine the best type of coverage for the work that they do. It is also important to pay premiums on time and to keep very clear records, including proof of bonding and insurance, as clients may ask to see this documentation before making a hiring decision. If claims are made against a bond or insurance contract, the premiums will generally go up, reflecting the increased risk to the surety or insurance agency. In the case of a bond, a claim may also be related to a breach of contract, in which case it is possible to lose one's business license after investigation by a regulatory agency.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Mary McMahon
By Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a SmartCapitalMind researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Discussion Comments
By anon122236 — On Oct 27, 2010

Very clearly explained. Thank you!

By anon70059 — On Mar 11, 2010

Thanks! No one has ever explained it so clearly before.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a...

Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.