We have already seen that the Surety Insurance, is a coverage that ensures the fulfillment of the obligations established in a contract, covering the losses that result from its non-compliance.
There are some factors that make the Surety Insurance different from a Bond, such as the fact that to hire it, it does not require a joint and several obligation. However, they are also similar in some things, for example in the elements for which they are integrated, although the terms are not the same:
While the Bond is an Accessory Obligation and its main objective is to comply with the Fiado in case it does not comply with the Beneficiary, the Surety Bond, is a main contract that compensates the compensation of the damages suffered by the breach of said contract.
The elements that make up a Bond and a Surety Bond are:
The relationship that exists between the Beneficiary and the Fiado (in the case of a Bond ) and the Insured and Contracting Party (in the case of the Surety Insurance ), is very similar in the fact that in both cases, the obligations to be fulfilled are reflected in the main document. However, while a Bond is an accessory obligation that can not exist without a primary obligation, the Surety Bond does not depend on another contract for its existence since this is the main contract.
In the case of the Beneficiary- Surety relationship (For Sureties ), the bond is established through the policy, which is granted to the beneficiary. In the event of default, payment is made within 60 days of the claim and the bonding YES has the right to request documents evidencing such failure.
In the case of the insured-insurer relationship (for surety insurance ), the link is the individual insurance certificate. In case of default, payment is made after 30 days, as long as the documents provided in the certificate are presented, the insurer CAN NOT request additional documents.
Finally, we have the case of the relationship between the Surety and the Fied (For Surety ) and Insurance-Contracting (For Surety Bond ). For the first case, the link is established in the application contract and it is obligatory to notify the party receiving the claim, while in the case of the Insurance of Bond, the bond between the Insurer and the Contracting Party is established in the policy, a document that authorizes to the insurer to issue the insurance certificate. In this case, the insurer has NO obligation to notify the contracting party of the receipt of the claim.
If you are looking to guarantee the fulfillment of an obligation, call us! Our professional advisors in Insurance and Surety can support you.