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Performance Guarantee, What is a Performance Guarantee? | CivilSure

A Performance Guarantee is a contractors promise to complete the project undertaken. To further elaborate, a Performance Guarantee is a document that legally confirms that you, the contractor will complete the contract you have undertaken.

A Performance Guarantee is issued by an insurance company or bank to an employer on behalf of the contractor to guarantee the full and due performance of the works by the contractor as set out in the contract data.

Performance Guarantees give the contract employer confidence that they will meet their projected deadlines and have their contracts completed.

In other words, should the contractor fail to construct the building according to the specifications laid out by the contract, the client is guaranteed compensation for any monetary losses up to the amount of the performance bond.

Summary of Performance guarantee;

Protects the Employer/Principal against the risk of the contractor failing to comply with the conditions of the contract set up between the Employer & Contractor.

Benefits Performance guarantee;

Give the Employer/Principal confidence that the contractor will complete the works and therefore makes them more appealing in the tendering process.

How to qualify for a Performance guarantee;

You will only need to set up your facility once, but you will need to apply for an individual guarantee for each and every contract undertaken.

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What’s the difference between a Performance Bond and a Performance Guarantee?

The term Performance Bond is often misleading, which can leave contractors confused about the difference between a performance bond and a performance guarantee. Most construction Performance Bonds are actually Guarantees. Bonds and Guarantees are related but are different. The right to claim under a Guarantee is linked to non-performance of the underlying contract. Under a Bond, the bank usually pays on demand regardless of the underlying contract.

Help! What construction insurance do I need?

Understandably this can be a challenge as there is a myriad of cover available in the construction insurance landscape.

Let’s quickly unpack 5 Construction Insurance options for you.

Four types of Contract Guarantees and What They Insure

Contract Guarantees in the construction, engineering, manufacturing and mining service industries are almost mandatory. Our range of Construction Guarantees are as varied as your requirements. Here’s a short list of the four types of Contract Guarantees and what they insure.

How do you get a Performance Guarantee?

When applying to get a Performance Guarantee, you’ll have to answer basic questions about your professional work experience and your company’s financial history. If your business has more than one owner, the financial credentials of all owners must be submitted.

Bank Guarantee to Fuel Guarantee

A Fuel Guarantee is security against payment default by the Retailer for fuel delivered by a Fuel Company. The Guarantee covers fuel, lubricant, rent & more

When is a Performance Guarantee called on?

Building Contractors often ask us the question: When is a Performance Guarantee called on? When your company starts bidding on projects for cities, provinces or municipalities, you’ll be expected to provide assurance that you can meet the obligations detailed in the Contract.

This assurance comes in the form of a Performance Guarantee. Basically, what happens is that a surety company (an insurer or bank), for a certain fee, steps in and guarantees your performance. Surety companies don’t work directly with Contractors. Instead, they partner with brokerages like us.

Get your Letter of Intent almost instantly

The term ‘Letter of Intent’ (LOI) is typically used to describe a letter from an Employer to a Contractor (or from a main Contractor to a Subcontractor) indicating the Employer’s intention to enter into a formal written contract for Works described in the letter, and asking the Contractor to begin those works before the formal Contract is executed. While an Letter of Intent may come in many forms, it’s essentially a communication expressing an intention to enter into a Contract at a future date.

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