Bonds

A bond (also called surety bond) is an agreement between three parties - the principal (the person purchasing the bond), the obligee (the person who receives the benefit) and the insurance company.

An insurance bond is not meant to pay for claims. It is meant to provide a financial guarantee that the person or entity purchasing the bond (the principal) will reimburse the obligee should the principal default, fail to fulfill its obligations, or a claim is made.