Bonds & Surety
Bonds & surety are in place to protect you as the employer against non-performance on the part of the contractor. The risk of non-performance is regarded in terms of quality of work, completion of work, and the time in which completion occurs. In case of your debtor defaulting payment, we will mitigate the matter and insure that your financial setback does not affect your business.
How does it work
A bond, is issued subject to our normal underwriting criteria which will enable you to tender for a contract knowing that the credit lines with your bank are not affected.
TYPES OF BONDS / GUARANTEE INCLUDE:
A bid bond is issued as part of a bidding process by the surety to the project owner, to guarantee that the winning bidder will undertake the contract under the terms at which they bid. The cash deposit is subject to full or partial forfeiture if the winning contractor fails to either execute the contract or provide the required performance and/or payment bonds. The bid bond assures and guarantees that should the bidder be successful, the bidder will execute the contract and provide the required surety bonds.
A written guaranty from a third party guarantor (usually a bank or an insurance company) is submitted to a principal (client or customer) by a contractor on winning the bid. A performance bond ensures payment of a sum (not exceeding a stated maximum) of money in case the contractor fails in the full performance of the contract. Performance bonds usually cover 10 – 12.5% of the contract price and replace the bid bonds on award of the contract.
This type of performance bond protects the customer after a job or project is complete. It guarantees that the contractor will carry out all necessary work to correct structural and/or other defects discovered immediately after the completion of the contract.
Advance Payment Bonds
An advance payment or simply an advance, is part of a contractually due sum that is paid in advance for goods or services, while the balance included in the invoice will only follow the delivery.