What are Bonds?
• The insurer
• The insured
• The beneficiary
It provides protection against the failure of a contractor to perform their duties under a contract. It is an undertaking from an Insurer to pay compensation to one party in the contract in the event that another party fails
to perform in accordance with the terms of the contract.
Who are the Parties?
The Surety – is the insurer (sometimes called the Guarantor)
The Insured – is the contractor who undertakes the services under the contract.
The Beneficiary – is the party who receives the services and will receive payment under the bond if the Contractor fails to perform.
Bonds are available for a range of projects depending on the type of contract they are providing the guarantee for.
The most common type of Bonds are:
• Road Bond
• Sewer Bond
• Water Bond
• Advance Payment Bond
• Performance Bonds
• Retention Bonds
Banks and Insurers will always require some form of security before offering a Bond, the difference between a Bank and an Insurer is that the Insurer will very rarely require 100% cash collateral, meaning that you don’t have to tie up essential working capital for long periods of time.
For further details please contact our Portadown office on 028 3833 3484.