Building on Bonds

Why have bonds become so important to the UK construction market?

Kerry London Ltd is proud to be the trusted insurance broker and Platinum Sponsor of BITA. With over 35 years’ experience and a Lloyd’s of London accredited broker, the company is well-positioned to offer comprehensive, bespoke insurance support.

Due to the financial impact of recent global events, many companies are finding that they are contractually required to have a guarantee bond in place to protect their Employer in the event of the Contractor’s default on their contractual obligations or insolvency.

What is a bond?

Guarantee bonds are a type of financial security that covers direct loss or damage suffered by an Employer because of a contractual default. Performance bonds are amongst the most issued bonds in

the construction market. They typically cover damages up to 10% of the overall contract value, although they occasionally offer 15% and less commonly 20% of the contract value.

Retention Bonds

Retention bonds effectively guarantee that the Contractor will rectify any defects after Practical Completion (PC) is achieved. The Retention bond would usually include a fixed date expiry 12 - 24 months after PC, or it would expire when the certificate of Making Good Defects is issued.

Advance Payment Bonds

An Employer will typically require Advance Payment Bonds if a Contractor requests an advance payment to cover the costs of securing materials in advance of works starting and would usually expire upon the delivery of materials to the site as certified by the Employer.

Section Bonds

Section bonds guarantee that infrastructure works are completed to the appropriate standard required by the local Highways or Water Industry.

Other bonds that Kerry London Limited can arrange include, but are not limited to:

• Deferred Consideration Bonds

• Off-site Materials Bonds

• Warranty Bonds

• HMRC Customs & Excise Duty Deferment Bonds

• Environmental Agency Bonds

• Reclamation Bonds

• Pension Bonds

• Bid Bonds

Kerry London can arrange reliable cover for the most complex risks from the world’s most trusted market. We provide advice and risk management solutions to leading names in the construction sector and to well-known sporting organisations.

If you have any questions relating to the information provided, please contact us: Tel: 020 7337 4025 Email: BITA@kerrylondon.co.uk Web: www.kerrylondon.co.uk