What is Surety Bonds?
Surety Bonds is a three-party agreement with which the Guarantor (Part One) is bound to the Beneficiary (Part Two) to cover the loss that may result from the failure of the Third Party to fulfill its terms and conditions between of the contract. Surety Bonds once written are very broad documents. The bond guarantees that promises made will be kept. If the principal defaults, the Surety must meet the guarantee and then subrogate against the principal through the indemnity agreement. Unlike insurance where losses are anticipated, there should be no losses under surety bonds in theory.
Why Do I Need Guarantee Insurance?
In the present global business environment and especially in the Greek market of reduced liquidity Surety Bonds is a dynamic financial and management tool. Surety bonds increase financial flexibility and provide potential for business growth by providing off balance sheet credit with more favorable terms than financial institutions. Surety bonds are an important tool in meeting strategic business goals and improving competitive positions.
With the latest legislative change 4541/2018 that insurance companies can provide hence forward surety bonds - the banks having held monopoly up until now- even in the context of public tenders and public sector contracts.
Globally the issuance of Surety Bonds/guarantees by insurance companies is a particularly widespread practice. Thus, while in Greece the letters of guarantee were issued almost entirely by banks, 25% of the letters of guarantee worldwide are issued by insurance companies with guaranteed capital of more than 900 billion euros. There are countries like England and Italy where guarantees/surety bonds from insurance and banking institutions share the market equally.
Which companies can be insured?
All companies of any legal form, having a Greek VAT number, can apply for the Surety Bonds guarantee and be issued in favor of the letter of guarantee after the issuance of the insurance contract.
Indicative business sectors:
What types of guarantees can Guarantee Insurance support?
Performance Bonds ensure that the project owner (Obligee) that the contractor (Principal) is qualified and has the capacity to perform the contract, and protects the Obligee from financial loss, should the Principal fail to observe the terms and conditions set forth in their agreement.
Bid Bonds ensure that the bid has been submitted in good faith, the contractor intends to enter into the contract at the price bid, and the contractor will provide the required performance and payment bonds (e.g. in Tenders of the Public or the Private sector).
Maintenance Bonds ensure that the project owner (Obligee) that, following the implementation of the project, the contractor (Principal) is qualified to perform the relevant maintenance contract, and protects the Obligee from financial loss, should the Principal fail to observe the terms and conditions set forth therein.
Advance Payment Bonds ensure that the advance paid to the contractor in charge of carrying a project will be returned to the project owner in case of non-completion of the project and breach of contract.
Payment Bonds Ensure that certain subcontractors, material suppliers, and laborers working on the bonded project will be paid. For instance, it provides a guarantee that the obligations deriving from sourcing materials will be covered.
Customs & Excise Bonds cover the claims of the Authorities for the payment of customs duties that may be established by the Insurer.
Why ZIA Insurance?
• ZIA Insurance has long-term experience and a large portfolio in the field of Surety Bond Insurance
• Specialized department for the service and management of requests for surety bonds
• Immediate approval and issuance
• Competitive premiums
2 Orfanidu Str, Thesssaloniki Greece
Τ. (+30) 2310 277 077 / Κ. (+30) 6978 188 463
Φ. (+30) 2310 277 087 / Ε. firstname.lastname@example.org