Surety bonds are an important risk mitigation tool. But it’s important to know that surety bonds and insurance are two different types of tools. The terms “surety bond” and “surety insurance” are often used interchangeably, causing some confusion for consumers. It’s important to note that surety bonds are not insurance.

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WHAT ARE BONDS?

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.