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Surety Bonds

Grow your business with confidence

In today’s competitive marketplace, it’s imperative for businesses that contractual obligations and promises of services are met.

Surety Bonds offer a practical alternative to bank guarantees, offering independent security, reducing costs, and freeing up working capital to help your business grow.

We help you secure the right surety bond for your business – be it a performance, advance payment or retention bond – without tying up your bank credit. Our experts work with top insurers to deliver tailored solutions for the construction industry, saving you money and boosting your working capital.

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types of surety bond

There is a wide range of surety bond products available, with the right solution for your business unique to you.

The types of bond include:

Performance Bond Insurance

A guarantee to the employer or main contractor that the contractor or subcontractor will fulfil their contractual obligations and if they fail to do so, that the guarantor will pay the damages sustained by the main contractor or employer, as ascertained and established under the contract terms and conditions, up to the value of the bond which is typically 10% of the contract value.

Restoration / Reinstatement / Landfill Bonds

Bonds that ensure land will be returned to an agreed state after a project is completed.

Retention Bond Insurance

A guarantee which enables the release of the whole of each certified payment to the main contractor or subcontractor including what would otherwise have been the portion retained pending release at practical completion and making good defects.

Guarantees that the main contractor or subcontractor will fulfil their contractual obligations and that if they fail to do so, that the guarantor will pay the damages sustained by the main contractor or employer, as ascertained and established under the contract terms and conditions up to the amount of the bonded retention value.

Advance Payment Bond

A guarantee to the employer or main contractor that contractual payments they have made in advance will be used and applied in accordance with the contract terms and conditions. In the event of failure to do so, the guarantor pays the damages sustained by the main contractor or employer as ascertained and established under the contract terms up to the amount of the bonded advance payment value.

Duty Deferment Bonds

A guarantee of payment of relevant taxes and duties to HMRC, allowing HMRC to offer deferred payment terms to the importer for up to 45 days. This enables the importation and distribution of the goods prior to the payment of the tax and duty, thereby easing pressure on cash flow.

Bid / Tender Bond

A bid or tender bond is a guarantee under which a party seeking contractual tenders seeks protection against, and compensation for, additional costs, expenses delays and contractual value differences if the successful bidder then fails to enter into the contract in accordance with their tender.

These bonds are very uncommon in the UK and are often required to be payable on demand (rather than after ascertainment of actual loss suffered) and therefore far more likely to be sourced from banks than from insurers and surety companies.

Construction Guarantee Bond

A performance bond specifically geared towards the construction sector and certain forms of construction contracts.

Road and Sewer Bond

A guarantee taken out on the behalf of a property developer to ensure roads and sewers are completed to the necessary standards under the Highways and Water Industry Acts.

Surety Bonds made simple

From performance to construction bonds, we help you find the right solution for your business in the UK and overseas.

We’ll guide you every step of the way – from first enquiry to after your bond is in place – giving you peace of mind, access to a network of trusted providers, better value, and expert advice backed by decades of specialist experience.

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frequently asked questions

What is a Surety Bond?

A surety bond is a surety guarantee, issued by an insurance or surety company, providing the security of financial indemnity in the event that your contractor, sub-contractor or supplier fails to perform their contractual obligations.

Surety bonds also serve to meet the statutory or regulatory requirements of Government agencies or other regulatory bodies such as HMRC, the environment agency, and local Government authorities.

When do you need a Surety Bond?

Public and private construction projects may require a surety performance bond as a prerequisite for the award of the contract or subcontract. The nature of the works or the structure of the contract may also lend themselves to advance payment and/or retention guarantees.

What parties are involved in a Surety Bond?

Although often referred to as insurance, and despite the fact that it is predominantly insurance companies who provide our guarantee bond requirements, a surety bond is not a contract of insurance.

There are three parties involved in a surety bond (legal terminology in brackets):

The party doing the work (the principal)
The party requesting the work (the obligee)
The bond issuer (the surety)

In the event that the first party fails to perform their contractual obligations to the second party, resulting in a proven contractual financial loss, the second party requests indemnification payment from the guarantor up to the level of the guarantee bond value.

The key difference, when compared with insurance, is that the surety guarantor then seeks reimbursement from the first party.

What’s an example of a Surety Bond?

A common type of surety bond is a construction bond. Take a construction project that is awarded to a contractor by a government agency to build a hospital or road.

To ensure that the building work is completed in an appropriate manner, and within a certain timescale, the government agency will request that the construction company purchase a surety bond that binds them to complete the work in a compliant manner.

If these obligations are not met, the agency can claim from their surety insurance, and the construction company will be liable to compensate the insurance company.

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