What is the primary purpose of a bond in insurance?

The primary purpose of a bond in insurance, particularly in contexts such as surety bonds, is to provide a guarantee that the bonded party will fulfill their obligations, which often includes protecting against financial loss caused by the actions or inactions of that party. When a bond is executed, it ensures that if the bonded party fails to meet their contractual obligations, the bond will provide compensation to the affected party, effectively minimizing their risk of financial loss.

This characteristic distinguishes bonds from other insurance products since bonds primarily serve to hold individuals or businesses accountable for their commitments, rather than merely transferring risk or providing compensation after a financial loss occurs. In this way, option B accurately captures the essence of how bonds function in the realm of insurance.