What is the difference between being licensed, bonded, and insured?

Licensed means the person or business holds the required state license. Bonded means the person has purchased a surety bond, which protects clients if the licensee fails to perform faithfully; public adjusters, for example, must post bonds ranging from $1,000 to $50,000 depending on the state. Insured means the business carries liability coverage, such as an errors and omissions (E&O) policy. Texas agency applications accept proof of either a bond or an E&O policy as financial responsibility.