Surety Bond FAQs
Questions and answers that relate to Surety Bonds, including what they are designed for, how they are calculated, and how much they cost. This information is provided as a guide only, and if you have any doubts or questions, please call our expert Bonds team on 020 7623 4957.
What is a Surety Bond?
A Surety Bond is sometimes referred to as a Guarantee Bond, or Contract Guarantee.
How is a bond calculated?
Surety Bonds are normally 10% of the contract value. Retention Bonds are usually between 2.5 and 5% of the contract value, and Advance Payment Bonds are a fixed sum, depending on the advance payment value.
How can I get a quote?
Typically, people will approach a bond specialist, like an insurance broker, who will request information as part of the application.
How much does a bond cost?
The cost of a performance bond depends on the financial strength of the company applying for the bond.
How long does a bond last?
The duration of a bond is agreed between Beneficiary and Contractor prior to the bond being issued. Different bonds are usually in place for different periods.
Can a bond be cancelled?
Unlike a general insurance product, a bond is a legal obligation that cannot be cancelled for any reason, other than its specified expiry provision having been achieved.
What form of wording is typically used in a bond?
There are three commonly used types of bond. Conditional requires that damages need to be established and ascertained by an appointed representative before any bond claim is paid.