As we know, the Bond and the Surety Insurance are guarantee instruments whose purpose is to ensure the fulfillment of the obligations established in a contract, covering the losses that result from its non-compliance.
So what is the difference between them?
A Surety Insurance is an insurance contract through which the Insurer undertakes to indemnify the Insured by way of compensation or penalty for the property damage suffered, within the limits provided in said Contract, when the circumstances agreed upon in the same occur. in relation to the breach by the insurance contracting party of its legal or contractual obligations.
A Bond is a Contract by which a Bonding Company undertakes before the creditor (Beneficiary) to comply in the event that the Debtor (Guarantor) does not do so, according to the scope established in the Bond Policy. Here are a few differences worth mentioning:
• A bond is considered an ancillary guarantee obligation, that is, there is a main contract that is supported. While surety insurance is the main contract and does not depend on another contract. • A surety bond is issued by a surety company, while surety insurance is issued by an insurance company authorized to operate in this field.
• In the bond, the guarantee is issued through a Bond policy, while in the surety bond insurance, a surety certificate is delivered which can be validated by means of a policy number, in both cases this procedure can be carried out electronically to through the portal of the issuing company.
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