What is the difference between surety & insurance?
Surety bonds (as contracts of guarantee) are not contracts of insurance. They are made available on recourse terms so that, if the surety has to pay the employer, it is entitled to seek reimbursement from the principal / contractor. Unlike indemnity insurance, where the premiums effectively pay for any losses, surety bond premiums are ‘credit and service fees’ charged for the use of the surety company’s financial backing and guarantee.
