bonds

Details needed to assess a bond

GIB will insure contractors with good financial standing and integrity. Other details required are:

•Financial statements and projects undertaken over the past few years

•Details of largest project completed successfully

•Details of persons or companies willing to provide counter guarantees

•Details of the project to be guaranteed, or tender documents

Counter Guarantee

Any bond GIB provides, the insured will be requested to provide a counter guarantee. For more details please contact our office.

Bonds are not the domain of insurance companies, traditionally being issued by commercial banks. GIB, however, breaks the mould again, with the issuing of bonds as an extension of normal insurance business.

What is a Bond?

A bond is basically a contract of guarantee

given by GIB (surety). A bond has three parties (surety, principal and insured). The contract guarantees one party (the principal) that the insured will fulfill his obligations (to pay an amount of money or to perform a contract).

Types of bonds GIB offers includes the following:

Contract or Performance Bond

The successful performance of any contract depends on many factors, for example, unforeseen price increases in labour or materials, strikes, financial difficulties, a change in the political or economic conditions which causes large additional costs not previously budgeted for, unusual weather changes, failure of sub-contractors, etc. Any of these circumstances can contribute to the failure of a contractor to perform.

GIB can provide a bond covering contractors against such factors.

Retention or Maintenance bond

After a project is completed and the project has been handed over to the principal, it is usual for the principal to withhold a percentage of the full contract value. This allows the contractor to carry out any maintenance or remedial works

that may result from defects discovered during the defects liability or maintenance period. The retention money pays for remedial works if the contractor fails to undertake required work.

Gib will provide a contractor with a retention bond by extending the performance bond to cover the maintenance period.

Advance Payment Bond

When a principal finances the contractor by an advance payment on the contract. GIB will provide the contractor with the bond by guaranteeing the repayment of the advance given.

Tender or Bid Bond

This is required in connection with submission of tenders for contractors. If the contractor withdraws after having been awarded the project, the principal can call up the bond as compensation.

GIB will provide a bond and the amount of bond will be the amount ranging between the lowest and next tender amount. GIB will only issue a tender bond when it is most likely that the performance bond will be issued by them after the tender is successful.