A bond is a financial guarantee to compensate the third parties against loss suffered as a result of failure of the insured to perform the task described. Upon executing such a bond as requested, the insurance company acts as the guarantor, and is bound to pay a defined amount of money should the person/party so guaranteed, fail to meet the terms and conditions of the contract with the third party.
Some bonds commonly signed by insurers include:-
Tender /bid bonds
The bid bond acts as security against cost of new tendering should the highest bidder refuse to take up an offer.
Performance Bonds
The performance bond guarantees that a contractor will perform under the contract in accordance with all the specifications of the bid submitted.
Immigration/Security Bonds
The immigration bond is issued to non-citizens to guarantee their good conduct. The bond offers protection against the cost of deportation or other consequences of the insured’s bad conduct
Customs/Import Bonds
The customs bond guarantees that, dutiable goods on which duty has not been paid do not find their way into the local market before duty is paid. The customs bond undertakes to pay the duty to the Board of Customs and Excise in the event of a failure to do so by the person or firm guaranteed or, for example, where a customs clearing agent wrongfully removes goods without paying the appropriate duty or where a local manufacturer fails to pay excise duty.
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