Surety Bonds

Surety bonds protect against the failure of a contractor to perform under a contract. The reasons for this are many and varied, but the most common are insolvency of contractor or breakdown of relations between contractor and employer.

Surety bonds are always supported by security, such as a corporate counter indemnity from the company or a group of companies. In certain circumstances additional security may be required to secure the bond, such as cash deposits, charges over property, or personal guarantees.

Parties Involved in a Surety Bond

There are usually three parties to a surety bond:

• the surety (sometimes called the guarantor) who is the insurer,
• the principal (the party who has undertaken to perform certain services under a contract), and;
• the beneficiary (the party who is due to receive the services and who will receive the payment under the bond if the contractor fails to perform, often referred to as the obligee).

Benefits of Surety Bonds to Your Business

Bonds free up banking lines and valuable working capital, increasing your business’s efficiency and ability to do more business.

In essence, a surety bond acts as a form of insurance for the obligee, ensuring that they have a source of financial recourse if the principal does not fulfil their commitments. If a claim is made against the bond due to the principal's failure to meet its obligations, the surety company investigates the claim to determine its validity. If the claim is valid, the surety company compensates the obligee up to the bond's face value.

Why Xenia for Surety Bonds?

Our team of experienced surety specialists work in collaboration and close partnership with our clients ensuring we achieve the very best possible result for you. We have:

• Close relationships with key underwriters in our market
• Extensive knowledge of trade sectors
• Reputation for negotiating policies for new entrants into the market
• Investment in continuous training and development of our staff
• Local offices across the UK

Xenia is one of the largest trade credit insurance brokers in the UK. We can place cover for trade credit risks and surety bonds in the UK, Ireland, across Europe and the US, and can support your other business insurance requirements via our parent company Brown & Brown.