Surety

I am often asked, what is the difference between a bond and an insurance policy. The biggest difference between a surety bond and an insurance policy is that the principle (purchaser of the bond) is liable to the surety (Seller of the bond) for any losses paid.  Yes! Bonds must be paid back. A bond is a guarantee that a specific duty will be discharged, or that a specific obligation will be fulfilled, otherwise a penalty will be paid. In its simplest form a bond is a contract that represents the promise of one party to be responsible for the failure of another party to follow through on a promise. 

There are numerous types of bonds! Each serving a different purpose. All based on a promise to fulfil a certain obligation. Bid bonds guarantee that a party bidding for a contract will fulfil the obligations of the contract. Payment bonds guarantee that bills for labor and materials will be paid, and that property will be turned over to the owner free of encumbrances. Bail Bonds guarantee that an accused person will appear in court at a designated time and place.