Buyers are increasingly demanding Bonds and Guarantees to protect them against losses suffered because of a third party’s defective work or delay, up to the value of the Bond – which is usually 10% of the content sum. They are also covered if a contractor becomes insolvent.
Depending on the type of Bond or Guarantee provided, liability is shared between the contractor and bondsman, which could be a bank or an Insurer. With Bonds and Guarantees supported by the insurance market, existing banking lines aren’t normally affected.
There are several benefits to these types of policies, including:
- Replacement of the loss in the event that the insured party fails
- A contract can be undertaken with reduced risk
- A failed contract can be completed once the Bond has been called
- They provide the confidence to proceed with the contract
- Disputes are resolved quickly through Underwriters’ involvement
To find out more, please contact our Account Management team.