Being bonded provides a business with an advantage, according to Lance Surety Bond Associates, Inc. It is often required by state governments to protect the consumer from fraud. Bonding assures the customer that the job is done to specific requirements. It also serves as protection against damage and theft.
The difference between insurance and bonding is a bonding company requires collateral and security to cover possible claims, Entrepreneur explains. Typical businesses that bond employees are temporary personnel agencies, contractors and businesses with government contracts. A bonded business is more desirable to consumers because it gives them confidence any problems that arise are covered by the bond.