Why take out surety insurance?

We are going to see the most important thing you should know about what it is and why take out surety bond insurance.

What is surety insurance?

Surety insurance is a form of financial guarantee that offers protection to companies and individuals in case of breach of contractual obligations.

What problems does your insurance cover?

Surety insurance covers a wide variety of problems related to the breach of contractual obligations by one of the parties involved in the contract.
Some examples of the problems covered by this insurance are:

• Non-compliance with the payment obligations agreed in a contract.
• Failure to comply with the obligations of delivery or provision of services agreed in a contract.
• Lack of compliance with legal or fiscal obligations by the insured company.
• Failure to comply with contractual obligations by a subcontracted company.
• Damages caused to the insured company as a result of breach of contractual obligations.

In summary, surety insurance covers financial and legal problems arising from the breach of contractual obligations by one of the parties involved.

Why take out surety insurance?

There are several reasons why a business or individual may consider taking out surety bond insurance, including:

• Compliance with contractual obligations: Hiring surety insurance can help guarantee compliance with contractual obligations, since the insurance company is responsible in case of non-compliance.
• Release of financial resources: By taking out surety insurance, a company can release financial resources, since it can use the policy as collateral instead of having to provide a bank guarantee or deposit an amount of money.
• Access to financing: In some cases, banks can accept surety insurance as collateral to grant a loan, which can help companies obtain financing.
• Protection against risks: Surety insurance can protect the company against the risk of non-payment by its customers, suppliers or contractors, which can prevent significant economic losses.

Improved financial reputation: By taking out surety insurance, a company can show its business partners that it is committed to meeting its contractual obligations and that it is in solid financial health.

Surety insurance for works, what it is and why hire it

Surety bond insurance for works is a type of insurance that is contracted to guarantee the fulfillment of the contractual obligations of a construction company or contractor in a work or construction project. In other words, this insurance covers non-compliance with contractual obligations, such as delivery times, the quality of the materials used, compliance with legal requirements, etc.

El surety insurance for works it is mandatory in some countries for any company that wants to participate in a public works tender. It is also common in private projects, since it offers a guarantee that the work will be completed on time and in accordance with the terms agreed in the contract.

It is important to hire this type of insurance because it can protect both the contractor and the owner of the work. On the one hand, the contractor can access financing to carry out the work, since the surety insurance guarantees compliance with contractual obligations. On the other hand, the owner of the work ensures that the work will be completed satisfactorily and within the established period.

In summary, surety insurance for works is an important tool to mitigate the risks associated with the construction of works and projects.

Hiring it can provide peace of mind for both the contractor and the owner of the work, and can be an effective way to protect the investment made in a construction project.

The contract with surety insurance

Un contract with surety insurance It is a legal agreement in which one of the parties (the insured) hires an insurance company to guarantee the fulfillment of the obligations of the other party (the policyholder).

In other words, the insured pays a premium to the insurance company and the latter agrees to pay an amount of money if the policyholder fails to comply with the obligations established in the contract.

To make a contract with surety insurance, you must first identify the parties involved and the obligations that you want to guarantee. Then, it is necessary to contact an insurance company that offers this type of service and request a quote.

Once the insurance company has been chosen and the amount of the premium has been agreed, the contract is drawn up including all the conditions and terms agreed by the parties. This contract must be signed by both parties and the insurance company.

It is important to bear in mind that the surety insurance is an alternative to the bank guarantee and can be used in various situations, such as rental guarantee, guarantee of compliance with construction contracts, guarantee of payments to suppliers, among others.

In conclusion and most importantly, hiring surety insurance can help companies and individuals to meet their contractual obligations, free up financial resources, obtain financing, protect themselves against the risk of non-payment, and improve their financial reputation.