Contract bond insurance
Contract bond insurance protects Swiss exporters from losses caused by a customer calling a contract bond (usually a bank guarantee) that was furnished to secure the exporter’s contractual obligations to the customer.
The bond is usually a down payment, performance or warranty bond, but SERV insures all types of contract bonds. A down payment guarantee is indirectly included in pre-shipment risk insurance and does not have to be insured separately.
Contract bond insurance covers the loss of the guaranteed sum if the foreign customer legitimately calls the guarantee because the exporter fails to meet its commitments due to political risks or force majeure or because an embargo imposed by Switzerland has made it impossible to fulfil the export contract. The guaranteed sum is even covered if the customer unfairly calls the guarantee and the loss is not reimbursed within three months.
Contract bond insurance may be supplemented by a Counter Guarantee .
- Maximum cover ratio: 95%
Product details contract bond insurance
Details
Also insurable are indirect contract bonds issued in favour of a guarantor. Commission and fees of the guarantor arising in connection with a contract bond are not insurable.
The insurance therefore covers the fair calling of the contract bond if the exporter cannot fulfil its obligations for political reasons abroad, as a result of an impairment of international payment transactions or due to force majeure and also the unfair calling of the contract bond.
Insurable risks
Period of insurance
The insurance begins when the guarantee document is handed over to the beneficiary and ends on its surrender or expiry or when the exporter is released from the Counter guarantee by the institution issuing the guarantee. If the contract bond is unfairly called, insurance coverage ends on fulfilment of the claim to repayment.
Special provisions
Contract bond insurance may be supplemented by a counter guarantee. In this case SERV provides the financial institution issuing the guarantee with default cover on the exporter’s behalf (with a cover ratio of up to 100 %) so that the exporter can fulfil its obligations towards the financial institution if the guarantee is called (see product information on counter guarantees).
Questions? Contact:
Christian
Hendriks
