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What is the difference between surety and insurance?

April 26, 2017Insurance surety

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What is the difference between surety and insurance?

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Insurance is a two party relationship where the insurance company assumes the risk of the principal; while a surety bond is a three party relationship where the principal still absorbs the risk. A surety bond protects the obligee and not the principal. Where insurance protects you against a risk, a surety bond guarantees you will fulfill an obligation.