The main types of warranty insurance:
Auction participation warranty insurance (BID BOND)
This is the warranty instrument that the bidder needs to present to the beneficiary in case of participating in the public acquisition procedure. This has the role of protecting the beneficiary against the possibility of non-compliance with the bidder’s obligations during the offer valability period and is submitted before the end of the public acquisition program or of the Framework Agreement.
Performance guarantee (PERFORMANCE BOND)
This type of warranty is given to the beneficiary of construction projects, through which the constructor assumes all obligations stipulated under the Framework Agreement between the parties.
Warranty Insurance for the maintenance period (MAINTENANCE BOND)
This refers to the warranty of the works that the constructor offers to the beneficiary, at the same time guaranteeing the engagement that the constructor assumed to the beneficiary regarding the project performance.
Warranty Insurance regarding the return of the advanced payment (ADVANCED PAYMENT BOND)
This is a warranty offered to the executor towards the beneficiary which guarantees reimbursement of the amount paid in advance by the beneficiary to the executor.
The risks covered by this policy are the ones related to the non-execution or the wrongful execution of the obligations stipulated in the contract in the relationship with third parties or beneficiaries. The advantages provided by the warranty insurance are:
- It represents an alternative to bank warranty letters, without the need to block an amount of funds;
- Reduced costs compared to bank letters;
- The warranty is issued fast and efficiently;
- As opposed to bank letters, warranties can also be issued conditionally, not only in an unconditional and irrevocable manner.