# Bonds vs commercial insurance Two things that get confused often. They protect different parties and pay out under different conditions. ## What you will learn - Who each product is designed to protect - When you would carry both - Why "I already have insurance" is not a bond substitute ## Different parties get protected Commercial insurance protects the business. The business pays a premium, and when a covered loss happens, the carrier pays the business (or someone the business is liable to). The business is the customer and the beneficiary of the policy. A [[term:surety-bond]] protects the public and the state. The business pays the surety, but if a covered harm happens, the surety pays the third party who was harmed and then comes after the business for reimbursement. ## Most regulated businesses carry both A typical multi-state operator carries a state bond per state where it's licensed, plus general liability, [[term:e-and-o]] insurance for professional services, and a cyber policy. The bond satisfies the state. The insurance protects the business. Neither replaces the other. Telling a state "we have an insurance policy" does not usually satisfy a bond requirement. ## FAQs ### Is a fidelity bond a substitute for a surety bond? No. A [[term:fidelity-bond]] protects the business against employee dishonesty. A [[term:surety-bond]] protects the public against the business. They are different products with different obligees.