Surety Bonds vs. Insurance Quiz

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Insurance policies protect the owner, while a surety agreement protects the insured
Surety bonds are based on a set fee and assume no losses, while insurance premiums are based on the level of risk.
Insurance covers specific losses, while a surety bond is for losses of any kind (correct)
A surety agreement transfers risk, while insurance does not.

The surety takes responsibility for the contractor's work.
The surety seeks compensation from the owner.
The surety seeks compensation from the contractor.
The surety seeks compensation from a party responsible for the contractor's default. (correct)

To assure the owner that the contractor is financially responsible (C) Signup and view all the answers

Both are irrevocable once issued (A) Signup and view all the answers

Based on a set fee and assume no losses. (D) Signup and view all the answers

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A surety bond assures the owner that the contractor is financially responsible.
A surety bond is not the same as insurance.
Insurance policies protect the insured, while a surety agreement protects the owner.
Surety premiums are based on a set fee and assume no losses.
If a loss is anticipated, the surety will not issue a bond.
A surety can seek compensation from a party responsible for a contractor's default.
A surety bond is for losses of any kind, while insurance covers specific losses.
Insurance transfers risk, while a surety agreement does not.
Once a surety bond is issued, it is irrevocable.
A surety bond is analogous to a cosigner for a minor's credit purchase.