The Surety Insurance is a guarantee instrument that is responsible for ensuring the payment of damages that may result in case of failure to comply with the provisions of a contract, compensating the insured for the penalty set in the policy.
Functions and characters
Their functions are similar to those of a bond, but with certain characteristics that in most cases make it easier to hire, not requiring as many guarantees or a joint obligation. The risk covered by this new guarantee instrument is the breach of the obligations of a contract or the non-payment of a debt.
The Surety Insurance is composed of 3 elements:
- the insured (beneficiary),
- the insurer (the insurance company that grants the policy) and
- the policyholder (responsible for compliance).
Main benefits of the Insurance of Bonds:
- It provides peace of mind to individuals and corporations at the time of doing business.
- It grants security that the obligations established in a contract will be carried out.
- It guarantees the repair of the damage in case of the breach with the contract.
- Avoid economic losses to the insured.
- It does not require a joint obligor for hiring, unlike a bond.
- It does not imply large economic losses since only the net premium must be paid.
- When a claim is issued, the compensation payment will be made after 30 days.
Being an additional security instrument, the Surety may only be issued by the Insurance and Surety Bonds (through intermediaries)
Are you looking to ensure the fulfillment of a contract, knowing that in case of non-compliance, there will be compensation that will avoid losses to the insured? The Surety Bond is, without a doubt, the instrument you need!