So, you're getting your bathroom remodeled and the Contractor goes bankrupt. Can you sue him?
If he didn't do anything negligent, other than not finish what was started... No. You can't.
If the Contractor was bonded, specifically a performance bond, then you can get your money back in case of that contractor's failure to complete the work. (Typically, because the contractor ran out of money.)
Being insured means an insurance company will hire a lawyer in case you are sued, depending on the forms and endorsements on the policy.
Bonded, protects you from the job NOT getting finished.