Surety Bonds & Guarantees
|What is a Surety bond?
A Surety bond is a guarantee to pay the direct loss suffered as a result of a breach of contractual or legal obligations. In practical terms the breach would usually occur if the party responsible for such obligations, such as a contractor, becomes insolvent. The Surety bond is a written agreement that transfers the risk of the contractor's default or insolvency to a Surety, providing protection for the employer under the contract.
What is the difference between Surety and Insurance?
Surety bonds, being contracts of guarantee, are not contracts of insurance. They are provided on the basis that if the bond is called and the Surety is required to pay the employer, then the Surety has recourse back to the contractor and is entitled to seek reimbursement from the contractor. Recourse to the contractor is provided by a counter indemnity in favour of the Surety company.
What is a Counter Indemnity?
A counter indemnity is a legal agreement, which entitles the Surety company to be reimbursed by the contractor on whose behalf the bond has been issued in the event that a bond is called and a claim paid under the bond that has been issued. As such, a counter indemnity reinforces the Surety's legal rights of recourse.
How do you apply for a bond?
Surety companies essentially provide lines of credit, so we will require financial information in the form of the most recently available audited accounts and up-to-date management accounts, together with details of banking arrangements. This financial information needs to accompany the relevant facility application and individual bond requirement forms.
What are the advantages of using OAMPS and the Surety market?
We can assist with bond wordings, working closely with clients and their advisers to identify unusual or onerous bonding risks. In addition, we can help our clients plan ahead, enabling them to tender for work in the knowledge that they have facilities available to meet their bonding needs. Critically, bonds issued in the Surety market can assist liquidity by not tying up
Bonds and guarantees may be required in many situations. As a result, we arrange bonding for companies in a number of trade sectors. These include construction, engineering and facilities management, retail, import and logistics, travel and waste management to name a few.
Our team is comprised of experienced professionals who can offer practical advice and assistance on the specialist Surety market as well as arranging facilities or individual bonds with the most suitable Surety.
We are independent specialist brokers. We will provide sensible and impartial advice to support our clients with their individual bond requirements. There are no fixed rates for Surety bonds and we are therefore able to negotiate terms on an individual basis. These will depend on a number of factors and we are well placed to provide a tailored service to our clients.
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