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

Surety bonds and insurance policies are both important financial tools that are used in different parts of the law, including insurance law in New Hampshire. A surety bond is a guarantee given by a third-party to guarantee that the person or entity making the bond will fulfill certain obligations. This could include ensuring someone will pay a debt, meet the conditions of a contract, or do complete certain work. Surety bonds provide financial protection to the entity that is requesting the bond, in the event that the obligor fails to meet the terms of their agreement. An insurance policy is a contractual agreement between the insurance company and the policyholder. The policyholder pays premiums to the insurance company, in exchange for the company providing financial protection in case of certain defined events. An insurance policy typically covers damages to assets or liabilities caused by a specific event, such as an accident, fire, or theft. In summary, surety bonds are guarantees provided by a third party, while insurance policies are agreements between the policyholder and the insurance company. In general, surety bonds provide financial protection to the requesting party in the event that the obligor does not fulfill its obligations, while an insurance policy covers financial losses caused by specific events.

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

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