I'm a notary public and was informed that I was going to need a surety bond for my business license. I just don't understand how the surety bond is different from liability insurance?
Liability Insurance is insurance that provides protection to the insured party from claims arising from injuries or damage to other people or property.
A surety bond is a bond issued by an entity on behalf of a second party, guaranteeing that the second party will fulfill an obligation or series of obligations to a third party. In the event that the obligations are not met, the third party will recover its losses from the company that issued the bond.
While both surety bonds and liability insurance help protect consumers of your services, the role of a surety bond is to guarantee performance while liability insurance pays out for damages. In many cases those seeking a professional license are required to have a surety bond (or a minimum amount of cash or assets in lieu of the bond depending on the regulator's requirements). Liability insurance is not often a requirement of licensing though good business practice to protect your business.