# Fidelity Bond vs Surety Bond *Reviewed 2026-05-15* > The word "bond" covers two very different protections. A fidelity bond protects a business from its own employees, while a surety bond backs an obligation to a third party. Here is the difference. ## 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. ## Comparison | 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 | ## Which is right for you - Fidelity bond: A fidelity bond fits a business that wants to protect its own assets from theft or fraud by its employees. - 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. We place the surety bonds that licenses require. See our services or contact us to size a bond for your license. ## Frequently asked questions ### 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.