Similar to how a bond works, the Surety Bond is a guarantee instrument that ensures the fulfillment of the obligations of a contract, so that these are carried out as they were established.
In the insurance sector, the term “Surety” means caution or prevention and refers to the guarantee or assurance that the agreement between two or more persons will be carried out as established.
The Insurance of Caution, works as an insurance of damages, since it indemnifies the insured by the amount established in the policy, in case of breach of contract. The risk covered by this additional guarantee instrument is the non-payment of a debt or breach of the obligations of the contract in question.
Ensures that the obligations of a contract are carried out, avoiding possible losses for the insured.
Provides security and guarantee to individuals and corporations to know that in case of default, the insurer will make the corresponding compensation.
It can only be issued by Surety and Surety Insurers (through its intermediaries), which guarantees its validity.
The payment of the corresponding premium is sufficient to have the protection of the Surety Bond, so that its contracting does not imply great economic losses.
Being an additional security instrument, the Surety may only be issued by the Insurance and Surety Bonds (through their intermediaries ).
Unlike a surety bond, the Surety Bond does not require a solidary obligation, nor so many guarantees, so the process of contracting and issuing is simpler.