A surety bond is a guarantee letter given by an insurance company to an entrepreneur or project owner to minimize the risk that will occur if the contractor fails to carry out his obligations. So there are three actors in a surety bond, namely the project owner (obligee), the contractor (principal) and Surety (insurance company). So a surety bond is similar to a bank guarantee, only the difference is who issues the guarantee letter. This Surty bond agreement is absolute and cannot be canceled.
The engagement on the Surety bond is jointly and severally responsibilities, if the project fails, the principal will pay compensation to the Surety (Indemnity Agreement) in accordance with the total loss calculation in the form of money that has been paid by the Surety to the Obligee.
There are four types of surety bond products issued by insurance companies, namely: Tender or Bid bonds, Advance payment bonds, Performance bonds and Maintenance bonds.
The premium that must be paid by the Principal
The premium rate will be calculated based on the percentage for each type of surety bond, which will be calculated on a prorated basis according to the contract period.
The engagement on the Surety bond is jointly and severally responsibilities, if the project fails, the principal will pay compensation to the Surety (Indemnity Agreement) in accordance with the total loss calculation in the form of money that has been paid by the Surety to the Obligee.
There are four types of surety bond products issued by insurance companies, namely: Tender or Bid bonds, Advance payment bonds, Performance bonds and Maintenance bonds.
The premium that must be paid by the Principal
The premium rate will be calculated based on the percentage for each type of surety bond, which will be calculated on a prorated basis according to the contract period.
