Surety Bond
Guaranteeing Performance. Protecting Commitments.
A Surety Bond provides contractual assurance by guaranteeing that a contractor or debtor will meet obligations committed to a beneficiary. It functions as a financial and performance safeguard, protecting the obligee if the contractor fails to deliver as per agreed terms.
Key Benefits
- Guarantees contractual performance
- Protects the obligee against contractor default
- Enhances credibility of the contractor
- Alternative to bank guarantees
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What is Surety Bond?
A Surety Bond is a formal three-party arrangement involving the Principal (contractor/debtor), the Obligee (creditor), and the Surety. Under this agreement, the surety issues the bond upon request of the principal and guarantees compliance with contractual commitments. The principal and owners sign an indemnity agreement to reimburse the surety for claims and associated legal costs.
Why do you need Surety Bond?
Contractual Assurance
Ensures all contractual obligations of the contractor are fulfilled as agreed.
Mandatory for Tenders
Required by government and public sector entities during bidding and execution.
Financial Security
Protects the obligee from financial loss due to contractor default.
Bank Guarantee Alternative
Provides bonding support without blocking banking limits.
Why choose Insurance Manager to protect your business?
Surety Expertise
Experienced handling of conditional and unconditional surety bonds.
Comprehensive Protection for Your Workforce
Ensure employee well-being with complete health insurance coverage.
Cost-Effective Group Insurance Plans
Affordable plans with benefits like maternity, critical illness, and dependent coverage.
Structured Underwriting
Detailed assessment of contractor capacity, character, capital, project, and contract.
Peace of Mind for Employers and Employees
Reduce financial stress with cashless claims and reimbursement options.
Project-Focused Evaluation
Evaluation based on project nature, scale, location, and beneficiary requirements.
Boost Employee Productivity and Retention
Build loyalty and motivation by easing economic and mental burdens.
Indemnity & Risk Management
Clear indemnity framework to manage claims and legal cost exposure.
What does Surety Bond cover and exclude?
Plan Coverage
Contract Performance Guarantee
Covers losses if the contractor fails to perform contractual obligations as agreed.
Bid Commitment Assurance
Ensures the bidder accepts and enters the contract once the tender is awarded.
Financial Compensation
Provides compensation to the obligee for losses caused by contractor default.
Technical & Scheduling Obligations
Covers failure to meet technical standards or agreed project timelines.
Government & Public Sector Contracts
Supports bond requirements mandated by government or public authorities.
Tender Security Requirements
Covers bid bond security, typically ranging from 1% to 5% of bid value.
Specialized Policies for Flexibility
Ensures project completion in accordance with contractual terms.
Conditional & Unconditional Bond Obligations
Covers liabilities as defined under conditional or unconditional bond terms.
Major Exclusions
Principal’s Intentional Default
Excludes losses arising from deliberate or wilful non-compliance by the contractor.
Losses Outside Bond Terms
Does not cover obligations not specifically stated in the bond agreement.
Normal Business Losses
Excludes routine commercial or operational losses unrelated to default.
Acts Beyond Contract Scope
Claims not directly linked to contractual obligations are excluded.
Unapproved Contract Amendments
Changes made without surety consent are not covered.
Indirect or Consequential Losses
Excludes indirect, incidental, or consequential financial losses.
Fraud Not Covered by Bond Terms
Fraud is excluded unless explicitly included in bond wording.
Expired Bond Period Claims
Claims raised after bond expiry are not covered.
Your Journey to Insurance Manager
When can I Claim?
A claim can be made when:
- The contractor fails to perform contractual obligations
- The bidder does not accept the awarded contract
- There is a breach of bond conditions
- Contract execution obligations are not fulfilled within agreed terms
Claims must be raised within the bond tenor and as per bond conditions.
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