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

Surety bonds and insurance policies are both forms of financial protection for individuals and businesses. They are similar in that they both provide protection in the case of a financial loss, but they are different in the way that they operate. A surety bond is a three-party agreement between a principal (an individual or business) and an obligee (usually a government agency). The third party is known as the surety, who guarantees to the obligee that the principal will fulfill its obligation. If the principal does not fulfill their obligation, then the surety will compensate the obligee. An insurance policy is an agreement between an insurance company and an individual or business. The insurance company agrees to pay for any losses or damages incurred by the insured party up to a certain limit. In return, the policyholder pays an insurance premium for the coverage. Insurance policies typically provide more comprehensive coverage than surety bonds. In Florida, surety bonds are often required by law for certain types of businesses, such as construction. Insurance is not compulsory but it is usually highly recommended, especially for businesses. Both of these financial tools are a good way to ensure financial security and to cover any losses or damages that may be incurred.

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

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