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Surety Bond security provisions explained.

22 June 2022

When asking a Surety provider to issue you a Bond you are effectively asking them to stand as your Guarantor. In doing so the Surety has the right to indemnity themselves for any claim made against them as a result of your failure.

There are various different levels of Security a company may be asked to give depending on the bond amount, experience of the company making the application and your financial soundness.

The following are the most common requests of security asked for from a Surety.

CCI / DCI (Counter Corporate Indemnity / Deed of Counter Indemnity) – The minimum security that any Bond is written upon. This is a document that would be signed by the Director to agree that should the bond be called upon; the Surety are within their right to recoup costs. This may be through an administrator.

Multi Party CCI/DCI – When the Company is part of a group of companies or has links due to common directors the Surety may ask for cross company indemnity arrangements, this may be due to the parent company having a stronger financial standing.

Personal Guarantee – This could be required if the company’s assets are not strong enough to support the Bond. This gives the Surety the right to pursue cost recovery against the Directors personal assets should the Bond be called upon.

Cash Collateral - An amount, potentially up to the full amount of the Bond would be held in an Escrow account and used if the Bond is called upon. If not, they are released back upon Expiry of the Bond subject to no claims or pending claims.

Here at SB&G we can help customers achieve the most competitive Bond but also on the most competitive terms. We can often avoid Cash Collaterals and Personal Guarantees for many contractors. So, if you are being asked to provide increased security please get in touch to see how we can help.