Insurance Bond is a pledge or understanding by a party (the guarantor) to stand as a surety for another person or a group of persons if they fail to meet a given obligation i.e. Contract. They are guarantees by insurance companies attesting to the credibility of an individual or a
Insurance Bond is made up of three parties:
i. Contractor - Debtor
ii. The Guarantor - Surety
iii. The Beneficiary - Principal
We underwrite basically the following types of Bonds:
Advance Payment Bond: this is issued by an insurer and guarantees that in the event that any advance payment to a contractor in executing a contract is made away with or utilized contrary to the requirements of the principal, such a default will be met by the company.
Performance Bond: this is a guarantee from an insurance company that in the event that a contract is not executed as demanded by the principal, any shortfall will be met by the company who wrote the bond on behalf of the contractor.