What is a bond vs insurance?

Insurance is a two-party agreement between the insurance company and the policyholder. The insurance company compensates the insured for a covered loss. Surety bonds are a three-party agreement between the principal, the surety (bonding) company and the obligee. The obligee is the party requiring the bond.

Bond insurance, also known as “financial guaranty insurance“, is a type of insurance whereby an insurance company guarantees scheduled payments of interest and principal on a bond or other security in the event of a payment default by the issuer of the bond or security.