Fidelity bond
Coverage that protects a business against losses caused by dishonest acts of its own employees, such as theft or fraud.
Surety bond
A three-party guarantee that a business will meet an obligation to a regulator or another party, often required for a license.
| Feature | Fidelity bond | Surety bond |
|---|---|---|
| Who is protected | The business that buys it | The public or the party that required the bond |
| What it covers | Employee theft or dishonesty | Failure to meet a licensed or contracted obligation |
| Parties involved | The insurer and the insured business | The principal, the obligee, and the surety |
| Reimbursement | The insurer pays the covered loss | The surety pays valid claims, then the principal repays |
| Why you get one | To protect your own assets | Because a license or contract requires it |
Best for
Pick Fidelity bond
A fidelity bond fits a business that wants to protect its own assets from theft or fraud by its employees.
Best for
Pick Surety bond
A surety bond fits a business that must guarantee a licensing or contract obligation to a regulator or another party.
Protecting yourself versus backing an obligation
Despite the shared name, these serve opposite purposes. A fidelity bond is closer to insurance for the business that buys it. It covers losses when an employee commits theft or fraud, and the business is the party protected. A surety bond is a guarantee to someone else. It involves three parties: you (the principal), the regulator or other party that requires it (the obligee), and the surety that stands behind it. If a valid claim is paid, you reimburse the surety.
The reason you obtain each is the clearest divider. You buy a fidelity bond to protect your own assets against insider dishonesty. You post a surety bond because a license, permit, or contract requires you to guarantee an obligation to others. Many licensed businesses carry both: a surety bond to satisfy the license and a fidelity bond to manage internal risk.
Cornerstone Surety writes license, permit, court, and fidelity bonds in all 50 states. See all bond types or how surety bonds work, or get a bond quote to size a bond for your license.
Frequently asked
- Is a fidelity bond really insurance?
- In practice it functions like insurance for the business that buys it, covering losses from employee dishonesty. A surety bond instead guarantees an obligation to a third party.
- Which one does my license require?
- License requirements are almost always surety bonds. A fidelity bond is something a business chooses to protect itself, not usually a licensing condition. Confirm the wording of your requirement.
More comparisons
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