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.