--- title: "Bonding: a smart and sometimes necessary solution" description: "Bonding: a smart and sometimes necessary solution" --- [Skip to content](https://blog.plexusgroupe.com/plexus-blog/news/bonding-a-necessary-protection-for-many-businesses#main-content) [![The Plexus Groupe](https://blog.plexusgroupe.com/hs-fs/hubfs/Logo%20and%20Design%20Files/plexus_sis_logo_color.png?width=1468&height=368&name=plexus_sis_logo_color.png "The Plexus Groupe")](https://www.plexusgroupe.com/) # Bonding: a smart and sometimes necessary solution 20 December 2016 [Mike Wilkening](https://blog.plexusgroupe.com/author/mike-wilkening) [Property & Casualty](https://blog.plexusgroupe.com/tag/property-amp-casualty), [News](https://blog.plexusgroupe.com/tag/news) Bonding is a guarantee that protects another party from financial loss. Bonds can broadly be separated into two groups: surety bonds, which protect against non-performance of work; and fidelity bonds, which protect against misconduct. Bonding offers many advantages. For example, consider a company that bonds its employees. This mitigates risk, which can't hurt when appealing to potential business partners. Also, end users of a service (such as a muncipality taking bids on a construction project) can rest easy knowing they are protected in the event things don't go as planned. Here are four common bond types: **ERISA Fidelity Bond:** How does a corporate retirement plan insure itself against fraud or dishonesty by plan management? An [ERISA fidelity bond](https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/publications/erisafidelitybondplanprotection.pdf) accomplishes this goal. Also, ERISA requires those who “\[handle\] funds or other property” to be bonded, which covers those who have the ability to transfer money from the plan. **Performance Bond:** Are you a contractor undertaking a project for a municipal or private client? You might be required to provide financial assurance that you will complete the project as required, which is the essence of a performance bond. These surety bonds are especially common when working with municipalities. **Bid Bond:** Firms seeking to win a construction contract may have to be bonded, thus ensuring the project will be completed at the promised cost and scope. Should a bonded contractor bid and fail to carry out the job, the bond [will pay the difference](https://www.irmi.com/online/insurance-glossary/terms/b/bid-bond.aspx) between that cost and the next-highest bid, as the International Risk Management Institute notes. **Licensing Bond:** A performance bond and a bid bond might not be all of the bonding a contractor needs to secure to take on a construction project. A licensing bond, which asserts that a company will follow state/local laws and regulations, could also be necessary. It’s another layer of security for municipalities — and another hurdle for contractors to clear. The Plexus Groupe offers expertise in a wide range of bonding. For more information, contact a property and casualty client service executive at 847-307-6100, or reach out to us [via the Web](http://www.plexusgroupe.com/s/contact-us/img). ### Related Post ##### [Plexus Private Client Solutions Hires David Miller as Vice President](https://blog.plexusgroupe.com/plexus-blog/news/plexus-private-client-solutions-hires-david-miller-vice-president) DEER PARK, Ill., April 20, 2017 — **The Plexus Groupe LLC** (**Plexus**), a national insurance brokerage... ##### [J.R. Martinez: Dream big, have a plan, hold yourself to a high standard](https://blog.plexusgroupe.com/plexus-blog/news/j-r-martinez-dream-big-plan-hold-high-standard) U.S. Army veteran, best-selling author, "Dancing with the Stars" champion and motivational speaker... ##### [Plexus V.P. 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