Bonds & Professional Liability
How does a surety bond fundamentally differ from an insurance policy?
Answer
The surety expects reimbursement from the principal after a loss
'After a claim is paid, the surety expects to recoup its losses from the principal,' and the principal 'owes a duty of indemnification to the surety.' When an insurance company pays a claim it 'usually doesn't expect to get repaid by the insured.'
Source: TACIR (tn.gov), Insurance as an Alternative to Surety Bonds for Public Officials
Not the answer
- A bond covers only property
- A bond has no premium
- The surety never pays claims
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