In its simplest form, financial guarantee insurance pays for losses because of the failure of an obligor to pay principal or interest when due. It may also pay as a result of default or insolvency, changes in currency exchange rates, a change in interest rates, or a change in the value of specific assets such as commodities. A common form of financial guarantee insurance is municipal bond insurance, which guarantees that bondholders will receive their principal regardless of the municipality’s ability to pay.Financial guarantee insurance can be very complex and is usually purchased by sophisticated buyers.