Surety Bond
A guarantee of fulfilment of obligations. The perfect alternative to a bank guarantee
Coverage focuses on obligations to perform an action
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A surety is a guarantee given to ensure compliance with a legal or contractual obligation. Its purpose is to assure one of the parties to a contract or agreement that the agreed obligations will be meet
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A surety bond guarantees that the Obligee (Beneficiary) will be indemnified for the damages that may be caused by breach by the Principal (Bondholder) of a legal or contractual obligation within the amounts and conditions covered. The coverage is focused on obligations to perform an action, and excludes payment commitments such as loans or financial commitments.
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Purpose of the bond:
A surety bond guarantees the Principal (Bondholder) in its dealings with the various public authorities or the private sector (Obligee) from the financial liabilities that it may incur due to breach of the guaranteed obligations derived from a contract (works, supply or provision of services) or from a legal provision.
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Details of the Surety insurance policy
1. A company (Principal) that needs to guarantee fulfilment of its obligations to the public authorities or in the private sector (Obligee) takes out a Surety bond.
2. This company (Principal) and the Obligee (Beneficiary) sign a contract.
3. The Principal makes an application for a Guarantee to Cesce (Surety).
4. Cesce makes a guarantee to the Obligee (Beneficiary) to whom the Principal is bound to fulfil its obligations.
Bondholder = Principal
Obligee = Beneficiary of the Bond
Surety
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Advantages of Surety Insurance
- They are not counted at the CIRBE. It allows the Principal to free up bank lines to use them for financing, which reduces the financial debt on the balance sheet.
- No opening or study costs.
- Issuing the policy generates no costs for the applicant company.
- Establishing ceilings and taking out the policy are quick.
- It facilitates commercial, since it reinforces the financial solvency of the companies in their contracting processes, thus increasing their ability to operate in the market.
- Rapid study of new lines and issuance of guarantees.
- Our experts will advise you during the contracting process and will support you in monitoring guarantees and ceilings.
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Cesnet
To make it easier for you to manage this Policy, Cesce provides you with Cesnet, a technology platform you can access through the website with the passwords you’ll be given.
At Cesnet you’ll have real-time access to all the individualised information available about your surety bond and to make applications for guarantees..
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Contractual:
All interested companies or those which enter into contracts with the Public Authorities are obliged to provide a guarantee. The contracts are usually for: works, supplies or provision of services.
- Tender/provisional guarantee. Necessary to access the tender and as a commitment to maintain the bid.
- Final/execution guarantees. Necessary to sign the contract and as a commitment to fulfil it.
- Advances and public procurement. They guarantee the Principal’s commitment to use the advance received for the work.
Legal obligations:
- Obligations to the Customs Authorities. They guarantee to the Customs Authorities that the Principal’s financial liabilities due to import operations will be met.
- Acceso a Red-Punto de conexión. Exigidas por la Administración y necesarias para solicitar acceso a punto de conexión en la red, dentro del proceso de desarrollo de una planta de energía renovable.
- Others:
- Guarantees for Purchase of Advertising Time. Coverage of liabilities incurred by the principal in the event of breach deadlines in communication and advertising actions.
- Guarantees to the Spanish Agricultural Guarantee Fund. Coverage of liabilities incurred by the principal in the provision of resources of the Agricultural Guarantee Fund.
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The cost will depend on the application.
Cesce will analyse the Rating Application and will notify you of the conditions of the surety bond (classification ceiling, rate, minimum premium and forms).
REQUEST FURTHER INFORMATIONTaking out the surety bond:
1. Applying for the bond
If you are a company and you need to provide guarantees to the public authorities, applying to Cesce for a Surety bond, as follows:
- Rating Application (send to utdcaucion@cesce.es).
- Amount applied for and forms of guarantees you need:
- Complete audit of the last two financial years. Individual and Consolidated.
- Signed and stamped preview of the current financial year.
- If the applicant is not audited, it must provide all the data deposited in the Commercial Registry and the full Corporation Tax for the last two financial years, as well as a signed and stamped preview of the current financial year..
- General details.
- Portfolio of Works or Orders.
2. Analysis of the application
Cesce will analyse the application and will notify you of the conditions of the surety bond (classification ceiling, rate, minimum premium and forms)
3. Issuance and formalisation of the bond
If the Bondholder accepts the conditions of the surety bond, it will be issued to you and you must send Cesce the specific and general Conditions, signed and stamped.
If you are interested, call us on +34 91 193 19 99 or send us your details and we’ll be in touch with you.
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How a Surety bond works
1. Request for Surety bond certificate
The Principal (Bondholder) requests the specific Surety bond Certificate for the obligation to guarantee, according to the form, the price and approved ceiling..
To initiate the issuance of guarantees, the following requirements must be met:
- A policy signed and stamped by the applicant company with the details necessary for them to be issued.
- The form of surety applied for must be set out in the specific conditions of the policy.
2. Premiums and issuance of the Certificate for the Obligee
Cesce issues the Certificate to the Obligee (Beneficiary) and invoices the corresponding premium. At the beginning of the month, Cesce sends a list of the guarantees issued in the previous month with the premium that each accrues.
3. Cancellation of the Insurance Certificate
The Insurance Certificate will be valid until Cesce cancels it. This cancellation may readjust the payout of the premium and/or reduce the amount paid within the established limit.
Requirement for cancelling guarantees on the part of the Insurer:
- The original Insurance Certificate issued is returned to the Insurer..
- The insurer receives the Receipt from the General Public Depository properly processed.
- In the event of loss of original documents: The original Beneficiary letter.
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Leave us your details and we’ll get in touch with you.Surety Bond
A surety is a guarantee given to ensure compliance with an agreement, obligation or contract. Its purpose is to assure one of the parties to a contract or agreement that the agreed obligations will be meet.
- A surety bond helps companies by guaranteeing that the Obligee (Beneficiary) will be indemnified for the damages that may be caused by breach by the Principal (Bondholder) of a legal or contractual obligation within the amounts and conditions covered.
- The purpose of a surety bond is to protect the Principal (Bondholder) in its dealings with the various public authorities or the private sector from the financial liabilities that it may incur due to breach of the guaranteed obligations derived from a contract (works, supply or provision of services) or from a legal provision.
- It is the perfect alternative to a bank guarantee. CESCE offers various forms of surety bond to meet Contractual or Legal obligations.