Logo Sammy free
Cuadrado amarillo


The best alternative to bank guarantees

Technical guarantees to the public administration for concessions, awards and tenders.


What is
surety bond?

Surety bond is insurance whereby the insurer (the company) undertakes, in the event of breach of the legal and/or contractual obligations of the policyholder (client), to indemnify the insured (beneficiary), by way of compensation or penalty, for the financial damage suffered within the limits established by law or in the contract.

What is surety bond for?

Surety bond is normally used to cover technical guarantees. Technical guarantees are understood to be when the non-fulfilment by the policyholder of legal or contractual obligations (execution of works, services, supplies, etc.) is being guaranteed. Surety bond does not cover guaranteeing payment commitments to suppliers; this type of insurance is part of the Credit Insurance branch and does not cover the guarantees requested by financial institutions for credits or loans.

Seguros de Caución

Applications of Surety Bond

Two very frequent applications of this type of insurance are the bonds that must be established in favour of public bodies for the tendering and execution of public works, and the guarantee of the amounts advanced by individuals for the construction of housing, by means of which the insurer will return such amounts if the work is not started or the dwelling is not delivered within the agreed deadlines.

Royal Legislative Decree 2/2000 of 16 June 2000, which approves the revised text of Law 13/1995, of 18 May 1995, on Public Administration Contracts, specifies the types of guarantees that the Public Entity admits, including surety bond and bank guarantees.


Types of Surety Bond


Consult the different Surety Bonds that we have available

Every contractor who applies for a public tender, as established in the Law on Contracts with Public Administrations, needs to submit, together with their bid, a bid bond to ensure that, in the event that they are awarded the contract, they will sign the performance contract in accordance with the conditions under which they made their bid.

For those Contractors who have not been awarded the contract, the validity of this guarantee shall last until the awarding of the contract.

These guarantees may be constituted by means of a surety bond policy issued by an insurance company authorised to do so by the Directorate General of Insurance.

The loss arises in the event that the Insured Party awards the contract to the Policyholder and it is not formalised for reasons attributable to the bidder (Policyholder).

This guarantees the proper fulfilment of a contract under the agreed conditions. It is generally used when a company has been awarded a contract and the Public Administration requests a guarantee for its fulfilment. In order to be eligible to tender, this guarantee replaces the prior tender guarantee and remains in force until completion of the work. This guarantee may be provided by a surety bond policy issued by an insurance company authorised to do so by the Directorate General of Insurance. The risk in this surety bond is due to breach of contract by the Policyholder, giving rise to a penalty or termination of the contract for causes attributable to the Policyholder. This procedure is also applied in the case of those activities that are required by the Public Administration to provide a guarantee in order to obtain an activity licence, such as in the Gambling Sector, Mining, Security, Travel Agencies, etc.
This guarantee is used when the successful bidder of a project requests that the Public Administration provide an advance payment from the awarded budget for materials. For the Public Administration to grant this, a guarantee is required. In this case surety bond guarantees that the materials supplied to the contractor will be incorporated into the fulfilment of the contract within the terms of the contract/or the proper application of the advance payment for the works in question.
This type of guarantee protects the owner of a completed construction project for a specified period of time against defects and failures in materials, workmanship and design that might later arise if the project has been done incorrectly. It acts as an insurance policy on a construction project to ensure that a contractor corrects defects that arise, or that defects are compensated for.

Surety bond:
the best alternative to bank guarantees

Surety bond is a guarantee that, unlike a bank guarantee, does not pledge financial resources and is not included in the CIRBE, i.e. it does not add to bank risk and this means a greater possibility of opting for other products such as loans, credit accounts, promissory note discounting, etc.

If you replace bank guarantees with surety bond, your cash flow improves and your banking risk decreases, thereby increasing your solvency.


Actualidad en
Sammy Free

No data was found