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Protect yourself from a breach of contract. This is the purpose of Surety Insurance. Be covered against the possible risk that the natural or legal person with whom you have entered into a contract will not fulfil its payment obligations. Surety insurance is usually contracted when companies must compete for public works projects with the Administration.
Surety insurance is an alternative to bank guarantees and has the same validity. Both with this insurance and with the guarantee, what is covered is the risk of non-performance of obligations or non-payment of a debt by the policyholder. In this way, the insured person can collect the credit if the policyholder does not comply with the agreement in the contract.
About Surety Ship Insurance
Surety insurance is a guarantee or guarantee in which the one who hires it undertakes to comply with the insured. If it does not comply with the agreement, the insurance company will indemnify the insured as stipulated in the contract. Thus, the insurer undertakes, in the event that the policyholder fails to comply with the legal or contractual obligations, to compensate the insured person by way of compensation or penalty for the property damage suffered, within the limits established in the policy.
The function of the Surety insurance is to provide the creditor (insured) with a guarantee in compliance with the obligations of the policyholder that allows him to recover the damages that he may suffer if at the time he fails to comply with his obligations. The particularity of this insurance is that it does not cover the reparation of a physical damage but a breach of the principal obligation.
The insurance company will determine whether or not to cover a customer. Therefore, it will analyze economically and financially the situation of the client so that he can know the extent of the risk he will have to assume. Always, before contracting, the client must deliver to the company the documentation that proves its solvency and conforms to the obligations.
The period of validity of the policy is agreed in the contract and will expire when the insured informs the insurer that the guarantees presented have already expired. The full premium is payable for the entire duration of the risk and is paid by the policyholder in the form stipulated in each supplement.
The main coverages are:
- Guarantees for public contracts: it is mandatory to present a Surety insurance if you want to work with the Public Administration. There are different types of guarantees according to the contracts with the Administration:
a. Provisional or tender guarantee: undertakings or professionals who choose to submit a tender to a tender.
b. Final guarantee or performance of contract: required by law if you are a successful tenderer.
c. Advance guarantee: where an advance payment from the insured to the policyholder is foreseen.
d. Guarantee of maintenance or quality: when the insured person imposes on the policyholder the obligation to guarantee the quality of the work or the good functioning. - Customs guarantees: Goods that are transported to a new country and are then expected to leave again, the importer instead of claiming the refund of taxes can present a guarantee to the customs.
- Garantías para agencias de viajes: las agencias deben prestar garantía ante la autoridad de la que dependen para el correcto cumplimiento de las obligaciones legales.
- Guarantees for security companies: guarantee at the disposal of the Spanish authorities to meet administrative responsibilities for breaches of private security regulations that the policy holder or security company in question may have.
- Special tax guarantees: as in the case of customs, there are other types of guarantees whose purpose is to guarantee the recovery of the tax debt.
- Guarantee before the Spanish Agricultural Guarantee Fund: the FEGA requests different types of guarantees linked to the agri-food sector: tender, compliance and advance payment.
- Guarantee for payments to account in purchase of houses: by law, the advance delivery of money for the purchase and sale of flat housing must have contracted a Surety insurance.