Bond Insurance

Bond is an agreement between three parties that has legal force. It is a promise by surety to pay the beneficiary a sum of money if the performance guaranteed in terms of the bond fails to materialize.

This is a type of insurance whereby guarantees schedule payments on a bond in the event of a payment/performance default by the Guarantee/Contractor.

There are three parties to this policy: The Principal, Contractor and Insurer (surety).

There are different types of Bond which are as follows:

• Performance Bond: Covers the principal if the contractor fails to perform the contract to the satisfaction of the principal.
• Advance Payment Bond: Covers the principal if the contractor fails to utilize the advance payment received for the purpose for which it was granted.
• Custom Bond: It covers the principal if the customs agent fails to perform his duties to the satisfaction of the Nigerian Customs Service.
• Bid Bond: It guarantees that the party tendering for the contract will not withdraw once the job is accepted and will take full responsibility for the work in accordance with its offer and specification.