Tryg Garanti

We are specialists on corporate insurance

Guarantee insurance

Guarantee insurance — when you are asked to provide security for contractual obligations

When you enter into a con­tract for a new project, you will often be asked to pro­vide a guar­an­tee in favour of your client. In such cas­es, you will need guar­an­tee insur­ance.

What is guarantee insurance?

Guar­an­tee insur­ance is used as secu­ri­ty for the per­for­mance of a piece of work, which has been agreed upon in a con­tract. It is also used as secu­ri­ty for advance pay­ments or pay­ments on account for ser­vices agreed upon in a con­tract.

Where do you use guarantee insurance??

Guar­an­tee insur­ance is  well-known espe­cial­ly in the con­struc­tion and man­u­fac­tur­ing sec­tor. Depend­ing on the projects, you have var­i­ous types of guar­an­tees.

It may be in the con­struc­tion sec­tor, where a con­trac­tor must pro­vide a guar­an­tee in favour of the own­er. Or where a sub­con­trac­tor must pro­vide a guar­an­tee in favour of the turnkey con­trac­tor.

Or it may in the man­u­fac­tur­ing sec­tor, where a sup­pli­er must pro­vide a guar­an­tee in favour of the buy­er.

In both cas­es, the guar­an­tee secures that the work is com­plet­ed in accor­dance with the con­trac­tu­al terms. And if not, that you are con­se­quent­ly com­pen­sat­ed for the pos­si­ble loss.

Guarantees in the construction sector

A Per­for­mance bond  pro­tects the own­er from loss­es, if the con­trac­tor fails to ful­fil his con­trac­tu­al oblig­a­tions.  The own­er will be paid the amount cov­ered under the bond and can use it to have the work com­plet­ed.

If the work has been com­plet­ed and defects are found dur­ing the main­te­nance peri­od, the own­er can call the bond. The amount cov­ered under the bond can be used to rem­e­dy the defects. There are sev­er­al indus­try stan­dards avail­able depend­ing on which coun­try you need the guar­an­tee to be issued.

Pay­ment or advance pay­ment bonds are also seen in con­nec­tion with con­struc­tion projects. Pay­ment bonds secure that the con­trac­tor pays his sup­pli­ers accord­ing to the con­tract. Advance pay­ment bonds secures refund of advance pay­ments, should the sup­pli­er not ful­fil his oblig­a­tions accord­ing to the con­tract

Guarantees in the manufacturing sector

Guar­an­tee insur­ance is also seen in con­nec­tion with deliv­er­ies from indus­tri­al enter­pris­es, where the buy­er wants to secure com­pen­sa­tion for advance pay­ments made to a sup­pli­er. If the sup­pli­er does not ful­fil the con­tract by deliv­er­ing the agreed mate­ri­als, the bond can be called. In such cas­es, espe­cial­ly advance pay­ment bonds are used.

We are specialised in bonds and guarantees

Tryg Garan­ti has an out­stand­ing expe­ri­ence in the field of bonds and guar­an­tees. We are spe­cialised in bonds and guar­an­tees for the con­struc­tion and man­u­fac­tur­ing sec­tor and have a long-stand­ing expe­ri­ence.

Tryg Garan­ti is the largest guar­an­tee insur­ance sup­pli­er in the Nordics and we can help you both local­ly and across bor­ders. If you have busi­ness units in var­i­ous coun­tries and you need to issue bonds in these coun­tries, we can offer to estab­lish a guar­an­tee facil­i­ty, which cov­ers all coun­tries and all busi­ness units in your group.

Read more about our prod­ucts and POM­net, which is our flex­i­ble online solu­tion offer­ing you a full overview of your port­fo­lio at any time

Do you want to know more?

If you want to know more about our solu­tions, call us at +45 44 20 39 00 or con­tact us tho­rugh our  con­tact form.