Product List


Performance Bond

A Performance Bond guarantees that a contractor will complete an awarded job according to the terms of the contract negotiated with the owner. The bond becomes payable if an unfortunate event, such as the contractor becoming insolvent, prevents the completion of a job according to the agreed upon terms.


Bidders bond

A bid bond is issued as part of a supply bidding process by the contractor to the project owner, to provide guarantee, that the winning bidder will undertake the contract under the terms at which they bid


Advance payment bond

Advance Payment Bond is a guarantee given when money is paid before goods or services are supplied. So, if the client agrees to make an advance payment (sometimes referred to as a down payment) to a supplier, a bond may be required to secure the payment against default by the contractor.


Warranty bond

A warranty bond is a financial guarantee made by a builder to protect the owner of a construction project from defects in materials or workmanship that might arise after the project is completed.


Retention money bond

A Retention Bond is a type of Bond that protects the client after the completion of the contract. Providing guarantee against the amount held by the project owner in case if the work done by contractor is unsatisfactory


Heirs bond

Heir’s bond – Guarantees the payment of all claims that may be filed by any compulsory heir deprived of lawful participation in the estate of the deceased and/ or any unpaid creditor who has a claim against the estate.

About Bonds

A surety bond is a legally binding contract or agreement  entered into by three parties: the principal, the obligee, and the surety.

The obligee, usually a government entity, requires the principal, typically a business owner or contractor, to obtain a surety bond as a guarantee against future work performance.

All surety bonds have the same basic structure. Unlike a traditional loan or insurance agreement, which typically involves two distinct parties, a surety bond means an agreement between three parties:

Principal

This is the party responsible for fulfilling an obligation to complete a specified task or simply to conduct business according to laws and regulations. The principal contacts a bonding company to obtain a Surety bond.

Obligee

This is the party owed the obligation from the principal. This party could be the general public who benefits from the principal conducting business per applicable laws and regulations. This party could also be an entity like a government agency that has hired the principal to complete a specific task or project. If an obligee feels the principal hasn’t met the terms of the agreement, the obligee may file a claim against the surety bond seeking financial compensation for damages.

Surety

This is the party that provides the financially backed guarantee to the obligee, indicating that the principal is capable of fulfilling the obligation. The surety reviews the principal’s qualifications for the obligation and obtaining the bond. Once the principal has proven capable of fulfilling the obligation and remedying any breaches in the contract or obligation, the surety will offer to stand in as a responsible party, financially, in the form of a surety bond.

SURETY BONDS FOR GOVERNMENT PROCUREMENT required under R.A 9184, otherwise known as the “GOVERNMENT PROCUREMENT REFORM ACT”

1.2 These surety bonds are options for the securities required in the IRR of R.A No.9184, which are the following:

  •  Surety bond (Bidder’s Bond) under Section 27 of the lRR;
  • Surety bond (Performance Bond) under Section 39 of the lRR;
  • Surety bond (Advance Payment or Downpayment Bond) under Section

4 of Annex “E” of the lRR;

  • Surety bond (Warranty Bond) under Section 62 of the lRR;
  • Surety bond (Retention Money Bond) under Section 6 of Annex “E” of the IRR.

SURETY BONDS FOR GOVERNMENT PROCUREMENT required under R.A 9184, otherwise known as the “GOVERNMENT PROCUREMENT REFORM ACT”

Undertaking/ Conditions:
Shall serve as a guarantee that, after receipt of the Notice of Award, the winning bidder shall enter into contract with the Procuring Entity within the stipulated time and furnish the required performance security.” Under the IRR, all bids shall be accompanied by a bid security payable to the Procuring Entity. Bid securities may also be in other forms such as cash or manager’s checks, bank draft or irrevocable letter of credit, or a Surety Bond callable upon demand issued by a surety company duly certified by the Insurance Commission.

Liability:
Shall not exceed the amount of bond callable upon demand

Period of effectivity/validity:
Not ot exceed one hundred twenty (120 ) calendar days

Required amount:
The amount of the bid security shall not be less than 5 percent of the Approved Budget for the Contract.

Form used G(13)-A
(Performance Bond) under Section 39 of the lRR.

Undertaking/ Conditions:
Performance Bond shall be required prior to the signing of the contract “as a measure of guarantee for the faithful performance of and compliance with his obligation under the contract.” Likewise, the performance security may also be in other forms. The amount of the security shall not be less than 30 percent of the Total Contract Price.

Liability:
To answer for the cost of delay in the compeletion of the project.

To pay for the additional cost to complete the project.

Period of effectivity/validity:
The bond is valid for two (2) years.

It shall remained valid until the issuance of certifcate of final acceptance of the procuring entity plus one (1) year defects libility period.

Required amount:
The amount of the performance bond shall not be less than 30 percent of the contract amount.

Form used G(40)
(Advance Payment Bond) under Section 4 of Annex “E” of the lRR.

Undertaking/ Conditions:
The Advance Payment Bond is provided for under Section 4 of Annex “E” of the IRR. Under Section 4, “the procuring entity shall, upon a written request of the contractor which shall be submitted as a contract document, make an advance payment to the contractor in an amount not exceeding 15 percent of the total contract price, to be made in lump sum or, at the most, two installments according to a schedule specified in the Instructions to Bidders and other relevant Tender Documents.

Liability:
To guarantee the reimbursement of the advance payment made by the Procuring Entity in the event that the contractor fails to comply with the obligations.

Period of effectivity/validity:
Valid co-terminus with the full recoupment  or the full payment of the advance payment released.

Required amount:
The amount of the advance payment bond shall not exceed  15 percent of the contract amount.

Form used G(41)
(Warranty Bond) under Section 6 of annex of the lRR.

Undertaking/ Conditions:
The contractor assumes “full responsibility for the contract work from the time project construction commenced up to a reasonable period and assumes full responsibility for the safety, protection, security and convenience of his personnel, third parties, and the public at large, as well as the works, equipment, installation and the like to be affected by his construction work and shall be required to put up a warranty security in the form of a callable surety bond.

Liability:
To guarantee the repair of the compeleetd projects against structural defects during the liabukity period of one (1) year.

Period of effectivity/validity:
One (1) year from the date of issuance of certificate of the final acceptance of the project.

Required amount:
The amount of the warranty payment bond shall not be less than 30 percent of the contract amount.

Form used G(42)
(Retention Bond) under Section 62 of Annex “E” of the lRR.

Undertaking/ Conditions:
Retention Money Bond is provided under Section 6 of Annex “E” of the IRR. Progress payments are subject to retention of 10 percent referred to as the retention money. The total “retention money” shall be due for release upon final acceptance of the works.

Liability:
To guarantee the realease or substitution of the retention money retained for each progress billing.

Period of effectivity/validity:
One (1) year from the date of issuance of certificate of the final acceptance of the project.

Required amount:
Amount equivalent to retained money normally 10 percent of the contract amoun

GET IN TOUCH

Whether you’re an existing broker partner or a new broker wanting to explore how we can help you win and retain more business, our underwriters are always available and happy to discuss your requirements. Get in touch today.