BONDS, SURITIES & GUARANTEES
Tel: 01424 217698 or 07971 996658 Fax: 0845 127 4385
E-mail: Rycroft Associates
Simple overview to a Construction Bond:
Credit Insurance
Finance
Credit Insurance Structures
Credit Insurance Costs
Jargon, Myths and History
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Construction Bonds or Performance Bonds as they are more commonly known (or sometimes surety bonds), guarantee up to the value of a bond which protects the employer against any losses and/or damages sustained as a result of the contractor failing to perform his contractual obligations.
Performance Bonds will, typically, have a face value or idemnity limit of 90% of the contract price. If the bond is called (due to the contractor failing to perform), the bond holder can ask the insurer to pay the net damages sustained up to the indemnity level or arrange for completion of the work depending on how the bond is worded.
Performance bonds have been around since 2,750 BC and more recently the Romans developed laws of surety around 150 AD, the principles of which, still exist.