Question

How are surety bonds different from insurance?

1) Surety bonds are issued by the gov; insurance is issued by private companies
2) Surety bonds guarantee specific duties/obligations will be fulfilled; insurance pays for losses
3) Insurance guarantees specific duties/obligations will be fulfilled; surety bonds pay for losses
4) Surety bonds guarantee that losses will be paid; insurance pays for obligations to be fulfilled

Answer 1

Surety bonds and insurance are different in terms of who issues them, what they guarantee, and how they handle losses.

Step-by-step explanation:

Surety bonds and insurance are both methods of managing financial risk, but they are different in several ways.

1. Surety bonds are typically issued by the government or a surety company, while insurance is issued by private companies.
2. A surety bond guarantees that specific duties or obligations will be fulfilled, while insurance pays for losses resulting from covered events.
3. On the other hand, insurance guarantees that covered duties or obligations will be fulfilled, while surety bonds may be used to pay for losses if the bonded party fails to fulfill their obligations.