Business Services Bonds
A Business Services Bond (often called a Third-Party Fidelity Bond) is a voluntary type of insurance coverage that protects your clients from theft committed by your employees. Unlike standard surety bonds that protect the government, or employee dishonesty policies that protect your business, this bond specifically safeguards your customers' property and money while your team is working on their premises. It is the specific financial tool that allows service companies to market themselves as "Bonded" to potential clients.
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Why You Need a Business Services Bond
You need a Business Services Bond primarily as a competitive marketing tool to build trust with new customers. Because letting strangers into a home or office requires a high level of confidence, many clients – especially in the janitorial, home health, and pet sitting industries – will simply refuse to hire a contractor who cannot prove they are “Bonded and Insured.” Holding this bond signals that you are a reputable professional who has financial backing to make things right if an employee acts dishonestly.
Business Service Bond FAQs
These are some of the most common questions asked about Business Service Bonds and how they work.
A Business Services Bond is a specialized form of fidelity bond designed for companies that send employees into clients' homes or businesses. It provides coverage against larceny, theft, and embezzlement. If one of your employees steals cash, jewelry, or expensive equipment from a client's property, this bond guarantees that the client can be reimbursed for the loss. It is distinct from liability insurance (which covers accidents/damage); this bond strictly covers intentional criminal acts of employee theft.
The cost of a Business Services Bond is generally very affordable and is based on the number of employees you have and the amount of coverage you select. For a small business with 5 or fewer employees, a standard $10,000 bond often costs as little as $100 to $150 per year. Even for larger coverage limits (e.g., $100,000), premiums remain relatively low because the bond functions as a "conviction-based" guarantee, meaning the risk to the surety is managed by requiring proof of the employee's guilt before paying out.
If a client accuses your employee of theft, the surety company will investigate the claim. Most Business Services Bonds are "conviction clauses," meaning the employee must be convicted of the crime (or admit to it) for the bond to pay out. Once the theft is verified, the surety pays the client for the value of the stolen items up to the bond limit. However, similar to other surety products, you (the business owner) typically sign an indemnity agreement, meaning you are ultimately responsible for reimbursing the surety for the payout.
A Business Services Bond is essential for any business that has access to a customer's personal property, cash, or private premises. This includes cleaning services (janitorial), landscapers, pest control technicians, home health aides, pet sitters, dog walkers, locksmiths, and IT repair specialists. While not usually required by state law for licensure, it is almost universally required by commercial property managers and savvy homeowners before they will sign a service contract with you.
To get a Business Services Bond, you can apply online with a surety agency. Because these bonds are voluntary and low-risk, they often do not require a credit check for standard limits (under $100,000) and can be instantly issued upon payment. You simply select your desired coverage amount (e.g., $5,000, $25,000, or $100,000) based on your client's requirements. To renew, you pay the annual premium invoice sent by your provider; there is typically no need to re-sign paperwork unless your employee count or coverage needs have changed.