What is the duty of a surety?

A surety is a bond that guarantees to pay the cost of completing a contracted construction project if a contractor is unable to do so. A surety bond is a three-party agreement arranged by the contractor with an insurance broker to guarantee completion of a contract. Surety bonds have traditionally been used in local authority construction contracts, but they are increasingly incorporated into commercial construction project contracts to guarantee their completion.

Bonds can help the construction sector remain competitive because they reduce the risks of taking on new business and help comply with contractual and regulatory obligations.

What’s the difference between an insurance surety bond and a bank guarantee?

There are several differences between an insurance surety bond and a bank guarantee, primarily a bond is provided by an insurer and a guarantee is provided by a bank. Choosing an insurance construction bond does not impact working capital or bank borrowing facilities, and therefore can provide a useful boost to a company’s cashflow.