Bonds
Performance bonds (contract guarantees) are not contracts of insurance. They are not based on the principal of indemnity but are a line of credit on recourse terms. The premium charged is, in effect, a fee for the financial backing and guarantee of the Surety.
By means of a Performance bond, a guarantee is given to a third party (the Employer of the Contractor) that payment will be made by the Surety in the event of a breach of the contract by the Contractor, resulting in a direct financial loss by the third party.
We will also consider Advance Payment bonds, Retention bonds and Street Works bonds when the Contractor has a Performance bond facility in place with us.
An indemnity is required from the Contractor in every case. It is a legal agreement in favour of the Surety which reinforces the common law and statutory recourse rights of recovery following a claim payment. However, in practice, the breach of contract will usually occur as a result of the Contractor's administration / insolvency.
The bond wording is usually requested by the Employer, however, in the absence of a requested wording we offer the ABI standard wording. The Surety can decline a wording or request amendments.
Product profile - Types of Guarantees and Bonds
Target Business
How to obtain a quotation
Benefits for the Contractor
If you would like to know more about how we can help or have any opportunities to explore, speak to your Norwich Union Account Manager or contact us directly.
