Type of Bonds
1. Contract Bonds
The Public Procurement Act takes into consideration among the security obligations that upon the decision of the tenderer this obligation can be performed not only by payment of the specified amount to the bank account of the contracting authority or by providing a bank guarantee, but also in the form of an insurance bond – including absolute suretyship – that is provided by an insurance company shall also be accepted. The parties of contracts as concluded under the scope of private law have the freedom to choose the insurance bonds instead of other instruments or to complement other instruments.
This type of bond secures for the prospective employer that the tenderer is making a responsible bid and will be bound if the bid is accepted.
This sort of collateral protects the employer against contractual default. In the event of the default of our client regarding his/her contractual obligations, the Insurer guarantees to bear the residual costs in order to fulfil the contract up to the bond limit.
This provides surety for the entitled in case the entitled exercises his/her justifiable quality claims against the obligor within a certain period of time after the technical acceptance of the construction in order to make good for the faults occurred, and the obligor is not able to fulfil his/her obligation.
Advance Payment Bond
When the costs and fees are advanced on account of goods or services this bond secures the employer.
2. Bonds of programmes which are supported by the Hungarian State or the EU
EU funds are provided to enterprises to improve their business activity. All available EU Funds granted via the New Hungarian Development Plan states that the companies applying for non-refundable subsidies have to provide security that covers the risk of performing the project and fulfilling all the indicators, as it was undertaken in the tender documentation. This security – among others – can be provided in the form of an on demand surety bond.
3. Commercial Bonds
This bond is for a particular business practice and individual bond, which provides a guarantee for the Customs and Finance Department of the Tax Authority for the payment of customs/excise duty (most usual forms: customs/excise storage, suretyship, deferred payment of customs/excise duty, T- form, etc.). The content of the surety bond is clearly laid down by the Customs and Excise Law.
These bonds are required to insure clients from Travel Companies against the loss of advance payments in the event of default of the travel company.
The insurance company undertakes to compensate the damage instead of the insolvent travel agency approved by IATA (International Air Transport Association) which the payment obligation is the liability of the travel agency selling the air ticket against the air company participating in BPS, IATA in Hungary, and the Direct Trade Representative Office of IATA, due to breach of its payment obligations.
4. Other bonds
We can be partners regarding other types of bonds as well, provided that the credit risk of the Principal enterprise is appropriate.
Our company, according to the international practice of insurance companies does not issue pure financial guarantees (payment guarantees – insurance guarantees used as cover for credit, payment guarantees used in customer-supplier relationships, etc.).