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A surety bond is essentially a promise or an undertaking by an insurer (the Surety), to pay to another party (the Principal or Beneficiary), an agreed amount in the circumstances set out in the bond wording and in line with an underlying performance based contract.
A surety bond is an unconditional and on-demand payment guarantee providing an alternative to bank guarantees or retention monies. They are widely accepted in the Australian and New Zealand markets by Federal, State and Local Governments, public and private enterprises.
The bond facility is unsecured with no tangible security or cash collateral required compared to a banks' secured position. Surety bonds provide certainty around expansion and growth or acquisition targets and allow for greater flexibility as companies can leverage off their capital base, enhancing working capital and liquidity opportunities used and recognised in major trading countries worldwide.
As a surety bond broker, Gallagher plays a critical role advising contractors on how the surety will view their company, along with presenting the business in the best way to effectively achieve a successful placement. Developing a relationship between the contractor and the surety is critical to a long-term partnership. Our strong relationships with sureties and understanding of their requirements, help us nurture a relationship that can grow and support the contractor's surety requirements into the future.
A bonding facility needs to expand as a Contractors business grows. Gallagher's approach is to ensure the surety is included in the contractor's business and operational plan and not focused solely on current project projections and financial ratios.
We encourage the surety and contractor to meet often, tour project sites, share strategic business plans, and analyse challenges, both positive and negative. Ultimately, the goal is to develop a pathway that establishes a true partnership.
Protect your assets and liabilities during construction with insurance cover from Gallagher, for all sizes and types of projects. Speak to the team today to find out more.
Manufacturing insurance is not a one size fits all product. Talk to our insurance specialists about a tailored professional solution for your business.