Bank Guarantee Insurance
Insurance against the unfair calling of guarantees issued in favour of the foreign buyer (i.e. bid bond, advance payment bond or performance bond).
Filed under
Product benefits
- Such guarantees can often be claimed on first demand without having to give any reason
- The Belgian exporter is protected against risks which do not depend on its contractual obligations
- Contract guarantees are accessory risks directly linked to the export contract
Main characteristics
- Contract guarantees issued by a Belgian exporter in favour of the foreign buyer as a warranty for due performance, linked to the export contract
- Credendo – Export Credit Agency insures the unfair calling of such guarantees by the foreign buyer as well as calling due to a political event
- Calling based on performance default is not covered
In an export contract, there are accessory risks for Belgian exporters which can also be covered, i.e. the contract guarantees issued in favour of the foreign buyer and/or related beneficiaries, as a warranty for the due performance of the contractual obligations.
Types of bank guarantees related to the export contract are: bid bond, advance payment bond, performance bond, retention money bond, maintenance bond…
In some cases, the beneficiaries of those guarantees can claim the bond on first demand without having to give any reason. Credendo – Export Credit Agency covers such guarantees against unfair calling of the bond.
Contract guarantee cover is generally provided under a single common policy together with the basic insurance for the export contract. For coverage of bid bonds, however, a separate policy is set up.
The premium percentage is calculated based on the import country risk and the tenor of the bond. Premiums are payable upon issuance of the policy.
Why Credendo?
Credendo – Export Credit Agency offers a complete range of products with the same goal: controlling risks related to foreign buyers in foreign countries. The ECA’s products are specifically destined for capital goods, services and contract works from Belgium. Not only Belgian exporters but also banks can make use of the products, which can also result in various financing solutions for the exporter and/or the foreign buyer.
Being the official Export Credit Agency for Belgium, Credendo – Export Credit Agency complies with OECD rules concerning the structure of export credits as well as the regulated premium percentage.