Surety Bonds

Assurein Insurance > Surety Bonds

In a variety of industries, construction being one of the most common examples, securing a surety bond as a guarantee that you will be fulfilling your contractual obligations towards a project that you have been contracted to complete is an absolute necessity.

A surety bond is a contract whereby the surety agrees to make good in the event of the default of another. It guarantees against unforeseen financial challenges that may arise with the principal. The guarantor or surety (insurance company) offers guarantee to a beneficiary (the obligee – government or corporate client) that an agreed sum of money will be payable to the beneficiary in the event that a company (the principal or supplier) fails to deliver on its contractual obligations.

At Assurein, we understand that bonds are critical in meeting contractual obligations and strive to secure the bonds you need to keep your projects moving.

WHY YOU NEED BONDS?

Economic downturn, labor difficulties, material shortages, equipment problems, and a host of many other problems can cause a contractor’s business to fail leaving projects at a standstill. Surety bonds address this risk by providing contractual and financial guarantee that the project will be delivered as expected.

They are often mandatory for large-scale projects and are used for assurance in projects, terms of commercial licences or permits and to guarantee payments.

Surety bonds perform the following functions:

They demonstrate a company’ commitment to a project, and its capability to deliver, thus enhancing its chances of winning tenders.
They provide assurance to subcontractors, laborers and suppliers that they will get work and be paid for it.
Guarantee that the bonded project will be completed according to the terms of the contract and at the determined contract price.
Reduce the possibility of a contractor diverting funds from the project.
Provide an intermediary – the surety – to whom the owner can air complaints and grievances.
Lower the cost of construction in some cases by facilitating the use of competitive bid.
Certain industries require surety bonds to get licensed. That is why these bonds are called License and Permit Bonds

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We offer a variety of bonds both from insurers and other financial institutions including

TENDER/BID BONDS

This is applicable if the contract is by tender and not mutually negotiated. The bond guarantees that the party tendering for the contract will not withdraw once the job is accepted and will therefore take full responsibility for the work in accordance with its offer and specifications.

It gives the beneficiary the right to call the bond on demand within a specified period and for a maximum specified amount.

PERFROMANCE BONDS

This is a document that the principal under a contract demands from a contractor for him to perform the contract as agreed but where the contractor fails to perform the contract as agreed, the principal may call for the bond and the surety (insurer or bank) will be liable to pay the bond value to the principal.

The bond guarantees the contractor’s competence to perform a contract given to him using quality materials needed to meet up with the standard.

ADVANCE PAYMENT BONDS

This is a type of bond that the principal of a contract request for before releasing a particular percentage of contract value to the contractor in advance for mobilization of the contract.

If the contractor fails in performing the contract as agreed, the principal has the right to call for the bond from the insurer or bank who will reimburse the principal against any monies that is lost through the default of the contractor.

CUSTOMS BONDS

This is a guarantee from a surety to the government that the principal will faithfully abide by all laws and regulations governing the payment of customs revenue together with the proper carrying on of business in dutiable articles (Imported goods)

WORK PERMIT/SECURITY BONDS

This is a legal authorization which allows a person to take up employment in a country where one does not hold citizenship. The first surety is usually the firm employing such a person. The second surety is the Insurance Company.

It is the responsibility of the first surety to write to immigration when such persons leave the organization for the bond to be cancelled. It is renewable in Kenya after every two years.

HOW DO I START?

When it comes to surety products, it’s in every party’s best interest to work with a reputable company that can demonstrate financial solvency and inspires confidence. We worked with many businesses in a variety of industries, crafting customized insurance plans to keep their operations safe and strong. Our surety team can help you find the bonding solution that suits your business and project.

Alternatively, you can fill the form below and our team will get back to you as soon as possible.

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