Surety Bond Insurance
Secure Your Deals with Surety Bond Insurance
The IFFCO-TOKIO Surety Bond Insurance offers four main types of bonds, each designed for specific contractual needs:
Advance Payment Bond: This bond assures the beneficiary that if the principal fails to complete the contract or adhere to its scope, the outstanding balance of any advance payment made to the principal will be repaid.
Bid Bond: This is an undertaking by the principal, guaranteeing that if they are awarded a contract based on their bid, they will proceed to furnish the necessary performance guarantee and enter into the contract agreement.
Performance Bond: This bond provides an obligation by the Surety to the Beneficiary, ensuring that the Beneficiary is protected in case the Principal fails to perform the duties or obligations detailed in the original contract.
Retention Money Bond: This bond addresses the portion of a contract's payment (retention money) that is withheld until the satisfactory completion of the original contract, providing a guarantee against the principal's failure to meet post-completion obligations.
The bonds are categorized as:
Conditional vs. Unconditional: Conditional bonds may have specific terms, limitations, and conditions that need to be met before a claim is paid, while unconditional bonds typically require payment upon demand, subject to certain pre-defined criteria.
Retail vs. Commercial: This distinction likely relates to the nature and scale of the projects or contractual agreements being bonded, with commercial bonds typically covering larger or more complex projects.
The core inclusion of these policies is the financial protection provided to the Beneficiary against the Principal's failure to perform their contractual duties. Specifically, the bonds cover scenarios where the Principal:
Fails to execute the terms of the Original Contract.
Defaults on repayment of an Advance Payment.
Fails to enter into a contract after a successful Bid.
Does not fulfill post-completion obligations related to Retention Money.
Becomes insolvent. The Principal is considered insolvent if they are legally or financially unable to pay their debts, as evidenced by events such as:
Bankruptcy filings or declarations: This includes petitions filed by or against the Principal, or official declarations of bankruptcy.
Formal arrangements with creditors: Such as entering into an assignment, composition, or similar agreement to settle debts.
Appointment of asset managers: Like a Receiver, Administrator, or Liquidator, appointed to manage the Principal's assets.
Compulsory or voluntary winding up: This refers to the formal dissolution of the Principal's business, unless it's solely for restructuring or amalgamation.
Other similar legal statuses: Any other legal situation indicating severe financial distress or dissolution, comparable to the above conditions.
This Surety Bond Insurance will not apply in the following cases:
If the original contract between the Principal and the Beneficiary is not valid, cancelled, or ends before any insured risk occurs. If there are intentional wrongdoings, serious negligence, or illegal/criminal acts by the Principal or the Beneficiary. If either party or their employees commit fraud, collusion, bribery, or use illegal means to create the original contract. If the Principal and the Beneficiary work together maliciously to break the contract. If there is any dispute between the Principal and the Beneficiary that does not directly relate to a covered breach of contract.If the Principal and Beneficiary change the contract without the Surety’s written permission.If there is any damage caused by war, nuclear risks, pollution, natural disasters (acts of God), or actions by courts or authorities—except when such damage is directly caused by the Principal's failure to perform their duties under the contract.If the Beneficiary spends money to gather proof or confirm that the Principal broke the contract.If the Beneficiary spends money on legal cases, arbitration, or court execution to prove the Principal didn’t follow the contract.If a third party suffers a loss that is not part of the original contract's scope.If there are price changes while completing the project.If there are penalties, late fees, fines, or special/punitive damages.If the Principal fails to pay the insurance premium or doesn't provide required documents, such as a letter of indemnity or security.If the contract isn't followed because of delays in getting approvals or permissions from government or legal bodies, or even from the Beneficiary.If the contract isn't followed because of delays in payments from the Beneficiary to the Principal.If any law excuses the Principal from fulfilling the contract, even if it's implied or based on behavior.If the contract is changed after the bond is issued—this includes changes in terms, responsibilities, or conditions—without informing the Surety.If there are extra liabilities for the Principal, such as losses to third parties, because of negligence or mistakes while performing the contract, beyond the scope of the bond's coverage.Prospectuses:
Policy Wordings:
Popular Searches
Download App
Lets Connect
