Whats the difference between a surety bond and insurance?
Surety bonds are not insurance. Insurance is basically a risk-transfer tool between two parties where individuals exposed to similar risk contribute premiums to a pool. Surety bonds are three-party agreements where loss is not expected and premiums typically cover the cost of prequalification services and underwriting. A bond is more like a type of credit where the principal is on the hook for claims payments in the event of default.
