The Surety Insurance, also known as Guarantee Insurance, is an insurance contract whose purpose is to ensure compliance with the obligations, legal or contractual agreed between two people. Through it, the Insurance Company commits itself to the insured, to compensate him for the damages that he may end up suffering, in case the policyholder does not comply with the established obligations.
The Surety Bond, is an additional guarantee instrument that will be implemented in Mexico from next year and will exist in harmony with the Bonds, which have long been used in our country to guarantee the fulfillment of different obligations and contracts.
How does a Surety Insurance work?
When one of the two parties involved in the signing of a contract requires the counterparty to guarantee or ensure compliance with the obligations established therein, the Surety Bond comes into play.
Unlike a Security Deposit, the Surety Insurance does not require so many guarantees to be processed, that is, it does not require a joint obligor, nor to leave a real estate or deposit in guarantee, it is only necessary to cover the insurance premium for count on protection. This greatly facilitates the issuance of said product, however, the cost of the premium can be up to 3 times greater than that of a Bond.
Being a security instrument, the Surety may only be issued by the Insurance and Surety Bonds, through its intermediaries and like any other insurance, is that company who blinde and protect the insured in case of a breach in the contract.
For all the aforementioned and many other reasons, it is expected that the Surety Insurance plays a very important role in the economy of our country and is really beneficial for physical and moral persons at the time of doing business.
Do you want to know more about the Surety Insurance ? Contact us, our specialized advisors will gladly provide you with more information.