Insurance Bonds

Insurance Bonds

Bond insurance is also known as "financial guarantee insurance" is a type of insurance whereby an insurance company guarantees scheduled payments of interest and principal on a bond or other security in the event of a payment default by the issuer of the bond or security.

Owners of projects, private companies or government bodies, usually require surety bonds from their contractors to protect themselves from the enormous cost of contractor failure.
No construction project owner, public or private, can afford to take the risk in awarding a project to a contractor whose responsibility is uncertain or who may go into liquidation halfway through the job.

Thus, in order to seal a contract with an owner, a contractor needs an insurance company’s financial resources to back the contractor’s commitment to completing the contract.