BOND INSURANCE

Bonding is a kind of contract, which normally comes in the form of either a Bank Guarantee or Insurance Guarantee. The guarantee is given by a surety to accept responsibility for the performance of a contractual obligation entered into by one person primarily liable under a contract with another person in the event that of that person’s default.

The common types of bond in use in the construction industry are: -

• Tender Bond
• Performance Bond
• Advance Payment Bond

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For more information on the above insurance, please contact our Customer Careline number at 03-2694 8000

TENDER BOND

This is required in connection with the submission of tenders for contract jobs with Public Authorities or Private Principals where relevant.

The main objective of this bond is to guarantee that the contractor who is awarded will accept the contract at the terms that was submitted by him to the principal. If he is unable to maintain his quotation, then the bond will be liquidated and the principal will request the surety to pay for the damages sustained up to the amount of guarantee.

PERFORMANCE BOND

This type of bond is usually required by the Principal to ensure that the Contractor fulfills his contractual obligations e.g. within the period specified or in accordance with other specifications as outlined in the Contract.

ADVANCE PAYMENT BOND (FOR GOVERNMENT CONTRACT ONLY)

This type of bond is issued when the Principal requires the surety to guarantee that the ‘advance payment” made to the Contractor is invested in pre-financing aspects of the Contract. (Normally large contracts)