A bond is a contract that guarantees the performance of an obligation or can protect against the dishonesty of employees. In essence this is a written agreement that guarantees that you will do what you say you are going to do or that your employees will act honestly.

So a bond is a bit different then the usual insurance. With your home and your automobile policy it is an agreement between you and the insurance company for coverage. With a bond it involves you, the insurance company and the company to which you are offering the guarantee.

If your bond was that you were to complete a structure and failed to do so then likely the insurance company would attempt to complete the structure and not have to pay out on the bond. The bond if paid out is a forfeit of an agreed upon amount. Often the necessary completion would be less then the total amount of the bond.

If you are a janitorial service you might require a bond. Security people are also often bonded. Very large construction projects are often bonded to guarantee that the work will be completed in a satisfactory manner. This type of bond involves financial underwriting including proof of life insurance on the principal and often key employees. Bonds are often paid immediately in full with premiums fully retained.

Ask your insurance agent, broker or risk manager for their recommendation for your bonding requirements.