The difference between liability insurance for business and surety bonds

Nina L. Kaufman, Esq.

Nina L. Kaufman, Esq.

An award-winning small business attorney in New York City, Nina is a sought-after professional speaker and Entrepreneur Magazine online contributor. She is the go-to counsel for knowledge economy and creative companies, delivering legal services and educational resources that save them time, money, and aggravation.

Posted on January 25, 2015 in Business Essentials

Q.: If I am bonded, do I also need to be insured?

A.: The terms “bonded” and “insured” are frequently misunderstood. While surety bonding is a type of small business insurance and each involves coverage for a financial risk or loss, the types of losses covered are generally different.  Surety bonds usually refer to a type of guaranty that a specific project, service or action that you have agreed to provide will be financially covered if your performance is not complete or satisfactory, in which case the bonding company will reimburse the customer for the loss.

Liability insurance for business, on the other hand, usually refers to financial coverage for risk of loss or damage to a tangible item, such as your car, your home, your body [personal injury] or your life. Liability insurance for business would also cover the merchandise that a company manufactures and ships.

Errors and omissions (E&O) insurance, on the other hand, is more like a surety bond because it provides coverage for acts performed or not performed, in contrast to protection for risks to a specific item.  You should discuss your specific needs with your insurance agent or other financial advisor.  It would also be a good idea to speak with an attorney.

Here are more law questions about small business insurance.


To get the latest posts delivered right to your inbox, enter your email in the box below:

back to top