What is the difference between an insurance policy and a bond?

The primary difference between an insurance policy and a bond in Florida is the purpose of each contract. An insurance policy is a contract between an individual or business and an insurance company that protects them from financial loss due to certain events, like injuries or damage to property. The insurer agrees to pay a specified amount of money or provide certain services if a covered event happens. A bond, however, is an agreement between a principal and a surety company that acts as a form of security to guarantee the performance of certain obligations. A bond serves as a type of financial guarantee that a party will fulfill their contractual obligations or pay the bond amount if they breach the contract. Generally, a bond will also include a provision for the principal to pay the surety for any compensation paid out for a claim. In summary, an insurance policy is a financial protection against certain risks while a bond is a form of security to guarantee the performance of certain obligations.

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