Guarantee insurance is not exactly an insurance product but rather a financial instrument.
The subject of insurance is a performance contract signed between the Insured, whose activity under the contract represents the risk, and the Contracting Authority, which is the beneficiary of the policy and in whose favor the insurance is concluded. Both parties under this insurance, the Insured and the Beneficiary, can only be sole traders or legal entities.
Once the insurance is concluded, the Insurer becomes guarantor of the Insured and is responsible to the Contracting Authority for the fulfillment of the respective obligations on the part of the Insured.
The coverage may be organized into several "clauses":
- guarantees related to participation in tenders, contests, public procurement;
- advance payment guarantees;
- performance guarantees;
- warranty (maintenance) guarantees.
The insurance does not freeze funds, thus allowing companies to use their working capital to implement several contracts at the same time. Please, note that if it comes to the payment of compensation, the insurance company is entitled to regress up to the amount of compensation paid.