What is a Materials Bond?

A Materials Bond, often called an Off Site Materials Bond, is a surety guarantee that protects payments made for materials stored away from the site. If the contractor fails to deliver the materials in line with the contract, the beneficiary can claim on the bond under the terms of the wording.

Why is a Materials Bond required?

When an employer or main contractor pays for long lead, high value or bespoke items before they are delivered to site, they are exposed if the supplier or contractor does not perform. A Materials Bond provides financial recourse for those advance payments if the agreed materials are not supplied.

Can you use employer or JCT wording for Materials Bonds?

Yes. Many construction contracts and authorities have their own wording for off site materials. We work with surety markets that are familiar with these forms and we will always try to place the bond on the wording required, where the risk profile supports this.

Do Materials Bonds require indemnity or security?

As with other surety bonds, a company indemnity from the contracting entity is normally required. For larger bond amounts or higher risk profiles, the surety may request additional comfort such as cross company indemnities or collateral. Our aim is to secure terms that are workable for all parties.

What information is needed to apply for a Materials Bond?

We typically request a completed application form, recent financial statements, details of the materials to be covered, a copy of the contract conditions for off site materials and any proposed bond wording. This allows our surety partners to assess the risk and respond with terms.

Materials Bond

What Is An Off Site Materials Bond

A Materials Bond is a UK construction surety that protects the value of materials or goods procured by a contractor before they are integrated into the site works. It guarantees to the employer or funder that materials will be delivered, installed and used as intended or the bond will be called. This type of bond is especially common when items are stored off-site, long-lead components are required or substantial advance payments have been made for specialist goods.

What Are Off-Site Materials?

This can refer to any Materials which are needed in relation to Construction Project stored at a location other than the contract site.

Insuring Clause in The JCT Contract

The cover required often relates to the following clause in the JCT contract:

"This Bond shall exclusively relate to the amount paid to the Contractor in respect of the Listed Items which have not been delivered to or adjacent to the Works."

While the Contractor will be required to arrange appropriate Insurance to cover the loss or damage to the items including the interests of the Employer the Off Site Materials Bond relates solely to the money paid for those goods.

Materials Bond or Advanced Payment Bond?

While similar to an Advanced Payment Bond a Materials Bond allows the Employer to claim for the value of those materials or goods or items pre-fabricated for inclusion in the Works listed by the Client in a list which has been included as part of the Contract.

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Materials Bond

What Is An Off Site Materials Bond

What Are Off-Site Materials?

Insuring Clause in The JCT Contract

Materials Bond or Advanced Payment Bond?

Call now for instant advice and indications on 02476 017646 or use the form opposite and we will contact you straight back.

GET A QUOTE