There are many different types of bonds available for your business. Each has its own form and purpose. Basically, there are three (3) parties to the bond contract. There is the bonded party, the person who is receiving the bond (obligee) and the insurance carrier (obligor). Bonds can be broken down into basically two groups, either a “surety” or a “fidelity” bond for insurance purposes. There are other types, such as investment bonds; however, these are not part of our discussion.
A surety or performance bond guarantees that a job or some type of performance being offered WILL be completed. A fidelity bond or honesty /crime bond is for business owners insuring against dishonest acts of its employees. It provides protection against high-risk employee activities so that they can work for employers such as banks.
Other examples of bonds are: notary bond, sales tax bond, tax preparation bond, and bid bond.