Bond Insurance

Bond Insurance and Construction Projects
In dealing with construction projects, the terms “Bonds” and “Bank Guarantees” often come up. Bonds and

bank guarantees can offer different facilities, and it is important in making financial decisions that these differences can be discerned. Making the best decisions for your unique circumstances requires an understanding of the way bond insurance operates and how it can be used to achieve a variety of your financial goals as well as a sense of how bond insurances are priced, the dynamics that drive the market and the various risks involved for you whether you are a contractor or a developer. This guide, intended as an introduction to Bond Insurance for interested parties offers information on the three main types of bond insurance, as well as tips useful to making a decision on purchasing bond insurance.

What value does Bond Insurance Add
Bond Insurance adds several value-enhancing features to those who are involved in a construction project:

• With bond insurance, a principal has a backup source of payment to rely on if the contractor cannot meet his obligations.
• For the contractor, it comes at a huge cost saving in that he does not have to freeze his capital as in the case of purchasing a bank guarantee