Technical guarantees and surety bonds are insurance contracts through which the insurer is obliged to pay the insured for the damages suffered, in the event of non-compliance with the legal obligations established in the contract.
This type of insurance has been widely used in the construction and civil engineering industry since the 17th century and provides a guarantee of payment of amounts or damages due under the contract.
Bonds and surety bonds are becoming more common outside of the construction industry, and a wide range of bonds or sureties are available in the insurance market to support contractual obligations or meet legal requirements.
First Requirement guarantees are guarantees issued by banks, and as their name suggests, they can be converted into funds with a simple request by the beneficiary.
Also called endorsements or guarantees at first request or at first demand, they can be defined as an atypical contract through which the guarantor has the obligation to the creditor to satisfy the guaranteed obligation simply when he claims it.
These are unrelated to the underlying contract and effectively negate any safeguards in the contract, leaving the debtor with no ability to interrupt performance of the contract. Bankers treat such instruments as part of a company’s line of credit.
Commercial credit insurance can be adapted to offer coverage in combination and/or in excess of first demand guarantees. For this reason, there are many advantages that this type of insurance can provide.
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