Bonding

By Entrepreneur Staff

Pencil

Bonding Definition:

A guarantee of performance required, either by law or consumer demand, for many businesses, most typically general contractors, temporary personnel agencies, janitorial companies and businesses with government contracts

Sometimes confused with insurance, bonding helps ensure that the job you've been hired to do is performed and that the customer is protected against losses from theft or damage done by your employees. The most common businesses that bond employees are general contractors, temporary personnel agencies, janitorial companies and companies with government contracts.

Although you still have to pay on claims if your employees are bonded, bonding has the side benefit of making your business more desirable to customers. They know that if they suffer a loss as the result of your work, they can recover the damages from the bonding company. The difference between a bond and insurance is that a bonding company ensures your payment by requiring security or collateral if a claim is made against you.

More from Insurance

Auto Insurance

A contract for an automobile in which one party agrees to pay foranother party's financial loss resulting from a specified event(for example, a collision, theft or storm damage)

See full definition

Health Insurance

A policy that will pay specified sums for medical expenses or treatments. Health policies can offer many options and vary in their approaches to coverage.

See full definition

Bonding

A guarantee of performance required, either by law or consumer demand, for many businesses, most typically general contractors, temporary personnel agencies, janitorial companies and businesses with government contracts

See full definition

Business Interruption Insurance

Insurance coverage that protects a business in the event of natural disaster, fire or other extenuating circumstances that affects the ability of your company to conduct business

See full definition

Latest Articles

Side Hustle

The Remote Side Hustle a 43-Year-Old Musician Works on for 1 Hour a Day Earns Nearly $3,000 a Month: 'All From the Comfort of Home'

Sam Ziegler wanted to supplement his income as a professional drummer — then his tech skills and desire to help people came together.

Leadership

Former Interrogator Shares 5 Behaviors Liars Exhibit and How to Handle Them

Five deceptive behaviors to look for and how to respond to those behaviors when you encounter them.