1 min read Basle Insurance Agency
What is the difference between a surety bond and insurance?
Insurance transfers your risk to an insurer. A surety bond is a guarantee to a third party that you will meet an obligation, and you must repay the surety if it pays out on your behalf.
A guarantee, not a risk transfer
A surety bond is a promise to the obligee that you will meet your obligations. If you fail, the surety pays and you must repay it. Insurance, by contrast, transfers risk to the insurer.
Where bonds are used
Bonds are common in construction, customs clearance, licensing and public contracts. They reassure the party you deal with that payment or performance is secure.
How cost is set
Premiums are a percentage of the bond amount and reflect your financial strength, track record and the nature of the contract. Strong financial statements usually lower the rate.
Need help with surety and guarantee bonds?
Read more about Surety and Guarantee Bonds or ask a broker for a quote.
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