A bond wording is a negotiation between an employer and a surety. Run before the contract is awarded, it is an ordinary exchange of drafts. Run after award, with a start date fixed and a main contractor waiting on the security before it will let anyone on site, the same exchange happens under a deadline that nobody in it created.
What we need at tender stage is short: the draft bond wording, the value and the expiry basis, and whether the employer will accept substitution of a retention bond for cash later. We will come back with the wording we can issue, the amendments we would ask for, and an indication of rate. None of it commits the applicant to anything if the tender is unsuccessful.
Two amendments account for most of what we ask. The first is an expiry that is a date or a defined event rather than “release by the employer”, because an obligation that only ends when somebody remembers to end it never ends. The second is a cap that is a stated sum rather than a proportion of a moving contract value.
Where an employer will not vary its standard form, that is a legitimate answer and we will usually still write it, priced for what it says. The point of asking early is not to win every amendment. It is that the applicant finds out what the bond will cost, and on what terms, while it still has the option of pricing that into the tender.
Written by the underwriting team at FDI Insurance d.a.c., Dublin. This piece is general information, not advice on any particular transaction — and it is not an offer of insurance.
