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

A surety bond and an insurance policy are both financial tools used to protect against certain risks, but there are some important differences between the two. A surety bond is a type of agreement between three parties: the obligee, the principal, and the surety. The obligee is the party who receives the benefit of the bond and is usually a government agency or individual. The principal is the individual or business that purchases the bond and is legally obligated to perform and abide by the terms of the bond. The surety company provides the bond and will be responsible for any losses or damages if the principal fails to do what is specified in the bond. Insurance policies, on the other hand, are contracts between the insured party and the insurance company. The insurance company is responsible for covering the costs of any losses or damages to the insured party, up to the amount specified in the policy. In other words, surety bonds protect the obligee from losses caused by the principal’s failure to fulfill an obligation. Insurance policies protect the insured party from losses caused by unforeseen risks. In Ohio, state law requires certain professions, such as real estate agents, to obtain surety bonds in order to help protect customers from losses caused by fraud or other violations.

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

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