What does it mean to be "bonded"?

I remember seeing job applications on which the question, “Have you ever been bonded?” appeared. Not knowing what it meant, and assuming that if it had ever happened to me I would for sure know what it meant, I just always answered “No”. I just finished reading a thriller called The Pope of Greenwich Village (pretty good read, above-average pulp fiction) in which a character’s dream is to own a liquor store with bonded clerks so they wouldn’t rip him off. So who bonds who?

A bond is sort of like insurance. I have to say sort of, because I am on record in front of the California Supreme Court as arguing that surety is not insurance, and bonds are akin to surety.

A bond is a financial guarantee that someone will be made whole if the actions of someone else are not honest or competent. It’s very similar to (BUT IT’S NOT!) an insurance policy. A bond is a guarantee of performance, or of honest performance. It is forfeit if the person who is bonded is dishonest, or does not perform.

When an employee is bonded, that means that he or she has met some minimum standards of fidelity, and is expected to be honest and trustworthy in handling other people’s money, for example, or coming in to their home to perform work. A bonding company will generally do some investigating into the to-be-bonded person’s background before issuing a bond.

Projects can be bonded, too. A contractor will often post a bond to guarantee that work will be completed by a certain date, or in a certain manner.

A bond is different from a traditional liability insurance policy in that to collect under the latter the claimant must show negligence and damages, whereas to collect under the bond the claimant must show only the fact of damages based on the nonperformance. (Hey Satan! This is another one of those technical differences and nomenclature that led to the misunderstanding you and I had recently! It’s a real difference, but the semantics can drive you crazy.)

Now this is a very, very general overview here. There are other kinds of bonds (posting bail, or giving a bond, to appear in court), or bonds posted with a court to guarantee that there will be money to cover, say, an appealed judgment, or any damages that may result to the opposing party where a temporary injunction is sought.

Have I confused you yet? :wink:

-Melin


“I’ll never argue with a lawyer again.” – The Devil Himself.

Oh, I thought they meant ‘bound’? can I go back and change my answers?


All this science, I don’t understand. It’s just my job 5 days a week-- Rocketman

That is, people get bonded by bonding companies? Do the bonding companies provide restitution if a bonded employee steals?

Yes Lawrence, that is correct. The bonding company can then go after the bonded person for restitution, which makes it different from true insurance at least in that regard.

-Melin


“I’ll never argue with a lawyer again.” – The Devil Himself.

Melin is on the nose, although I would also add the slightly different issue of bonding for purposes of Customs (Customs brokers, and similar), but ultimately not different enough to warrant any more explanation re your OP.


O le mea a tamaali’i fa’asala, a o le mea a tufanua fa’alumaina.

Both employee fidelity (or honesty) bonds and surety (performance) bonds are issued by insurance companies. It is my understanding that the question about being bonded is on an employment application because the employer has their own employee fidelity bond (or insurance policy), and the bonding company may (should) opt to verify whether or not the applicant has ever been involved in a bonding claim.

Most insurance contracts are two-party contracts between the insuring company and the party purchasing the coverage. Employee fidelity and surety bonds are three-party contracts between the purchaser (employer or future completed building owner), the insuring/bonding company, and the employee or contractor, guaranteeing the employee’s acts of dishonesty or the contractor’s inadequate/incomplete work will be made whole by the insurer or bonding company, after which point the insurer or bonding company then seeks reimbursement from the defalcating (dishonest) employee or the builder who did not complete the project under the terms and condition of the bond (surety)/or insurance contract. [Note: the reimbursement is not always guaranteed.]

Since insuring companies routinely issue these bonds, Melin, why would you argue that a surety is not insurance? (If you’re able to discuss the case further without prejudice.)
You’ve got me curious.

Although surety looks and walks a bit like insurance, there are technical differences which allow it to be classified otherwise, and there are companies which are surety companies, issuing surety bonds, which are not true insurance company.

The reason for arguing a difference such that surety is not insurance is regulatory. My then-client was trying to get around the provisions of Proposition 103. We lost on other grounds, but recently the California Supreme Court issued an opinion (which I had nothing to do with) stating that surety is, indeed, not insurance.

-Melin

The woman who cleans my apartment is bonded by her agency. That way if anything goes missing or she breaks my furniture, they pick up the tab. The agency is also on the hook if she steals something.
Newspaper deliverymen have to be bonded if you want them to deliver the paper to your door in a security building.

OK. Step two: as a client of whatever company, let’s say a house-cleaning firm, I can demand that that company’s employees are bonded? I assume that this is true, since as a private citizen I can enter into whatever contract I like and turn down any I don’t. How common is this? It amazes me that it never happened to me after all the crap jobs that I used to have.