What Is The Difference Between Being Bonded and Insured?

For business owners, insurance and bonding can establish client trust and confidence throughout a project. If you work in an industry that requires or uses insurance and bonds or are a client or patron of someone who uses them, keep reading to learn more about how insurance and bonds can protect you, your business, and your clients. 

If you know you need insurance or bonds, contact our team for a quote. We’d love to help you get started so your business can confidently grow. 

What Is The Difference Between Insurance and Bonds? 

Driving down the road, you might see a truck with the words “licensed, bonded, and insured” on the side. But what does “insured and bonded” mean? 


Most businesses, big or small, need insurance. Commercial or business insurance policies protect the business against liabilities and losses. When you purchase an insurance policy for your business, you are protecting yourself and your business from the risks that may come. Business insurance protects primarily against financial losses, so things like damage to property, general liability, and other claims are covered. 

There are many types of insurance policies available to business owners. Policies can be customizable and ensure protection for the unique needs of a business. Regardless of the insurance policy you choose, when you select a policy, you will pay a premium to the insurer, who provides the protection outlined in the policy. 

Our team provides support and insurance solutions for businesses of all sizes in Oklahoma and Kansas. 


Just as there are many types of insurance, there are also many types of bonds. Bonds are available for various industries and needs, but in their essence, they serve the same function. Bonds provide a guarantee that something will happen, and if it doesn’t, there is a mechanism for indemnification (or compensation for harm and loss).   

A surety bond is a contract between three parties often used to guarantee work will be done. The three parties include the company issuing the bond (the surety), the party doing the work (the principal), and the third party for whom the work is being performed (the obligee). 

The principal, who is responsible for the work being performed, purchases the bond to ensure the work they do. If the principal doesn’t fulfill the bond stipulations, the surety company will pay the obligee to compensate for the work that did not meet the agreed-upon expectations. The principal then has to repay the surety company for the indemnified money given to the obligee. 

In this way, a bond is different from insurance. With insurance, you pay a premium, and the insurance company will cover damages without repayment. With a bond, the bond company will pay for the damages, but you must repay the surety company. 

We know that bonds can seem complicated, but our team is here to help you. Bonds do make a difference in attracting new clients and building trust. Contact the Kennedy Agency team if you have any questions about surety bonds. 

Insurance For Contractors and Tradespeople 

In particular, insurance is essential for contractors, tradespeople, and those working in the construction industry in any way. General liability and professional liability coverage provide straightforward coverage for your business. If you pay your premium, your business is covered against injury or damage claims. 

While it is not required by law for all businesses to have insurance coverage, many prospective clients will not work with tradespeople or contractors who do not have insurance. Insurance provides protection many people need to feel comfortable working with a business. We recommend all companies have business insurance coverage. 

Types of Business Insurance 

In addition to general liability insurance and professional liability insurance, these types of business insurance policies might be helpful for your business: 

  • Commercial auto insurance 
  • Commercial property insurance 
  • Workers compensation insurance 
  • Commercial umbrella insurance 
  • Business interruption insurance 

Who Needs To Be Bonded? 

In Oklahoma, general contractors are not required to have a state-issued license. Similarly, in Kansas, the state doesn’t issue general contractor licenses, and local municipalities have different requirements. So in both states, the best way to identify a reliable contractor is often by making sure they are both licensed and bonded. Some professions require being bonded as a requirement for licensure, like plumbers. 

Construction contractors are just one of many professions and industries that utilize surety bonds. In addition to providing a sense of security and confidence among those you work with, being bonded and insured also protects you and your business financially. 

A few other professions that utilize bonds include: 

  • Motor vehicle dealers 
  • HVAC technicians
  • Plumbers
  • Electricians 
  • Roofing companies 
  • Environmental remediators 
  • Landscapers  
  • Arborists 
  • Freight and transportation
  • Driving schools 
  • Mortgage brokers 
  • Tax preparers 
  • Loan brokers 

Types of Bonds 

Under the umbrella of surety bonds, there are two categories of bonds: contract bonds and commercial bonds. 

Contract surety bonds: this bond guarantees a contract that the involved parties agree upon. This is the type of bond you would commonly see in the construction industry. There are four main types of contract surety bonds–bid bonds, performance bonds, payment bonds, and warranty (or maintenance) bonds. Each type protects different aspects of the construction process, project, or payment. 

Commercial surety bonds: this category of bonds covers a broad range of activities, and they are used across many industries and across all levels of government. Commercial surety bonds include license and permit bonds, court bonds, fiduciary bonds, public official bonds, and miscellaneous bonds. 

Why Would A Customer Value A Bond? 

Many people think of bonds as a safety net. For example, imagine a family hires a contractor to remodel a kitchen and has clear expectations about the quality, timeline, and other stipulations. This family could ask the contractor to purchase a surety bond with those stipulations. The bond will protect the family, their home, and their money, and it will motivate the contractor to meet deadlines, produce high-quality work, and grow trust between the family and the contractor. 

Do I Need Both Insurance and Bonds? 

In short, maybe! Some professions in Oklahoma and Kansas carry insurance and bonding requirements. Plumbers and HVAC technicians are two professions that require both. In that case, there’s no question that you do. 

Suppose you own an event rental company in Tulsa that rents furniture, lighting, linens, and other items. In that case, being both insured and bonded may communicate a level of professionalism and reliability that attracts and reassures clients. This is more complex, and you might need some additional advice. 

Contact our team today if you’re unsure about what your business needs to be protected. We’d love to talk about your bonds and insurance needs.


111 SE Frank Phillips Blvd
Bartlesville, OK 74003