THE SURETY INSURANCE IS A WAY TO GUARANTEE AN AGREEMENT BETWEEN PARTIES
Just as we dress appropriately to see a client, we also have to dress appropriately when we want to request financing.
Thus, the surety insurance becomes a non-bank financial instrument that directly or indirectly allows improving the financial management of a company.
By using surety bonds v. bank guarantees it already allows a benefit by reducing the Bank of Spain Credit Reporting Agency financial risk and improves the bank credit scorings and, therefore, the capacities and prices to which we have access.
But it also implies that banks do not have access to sensitive information such as guarantees for tax deferrals, judicial guarantees, guarantees between private parties, or guarantees for security companies that imply a contribution of additional guarantees such as mortgages, guarantees from members, or pledges.
SURETY INSURANCE ACCORDING TO
THE NATURE OF THE ACTIVITY
It is contracted at the request of the Ministry of the Interior to authorize the start of the activity (Spanish Royal Decree-Law, of September 14, previously regulated by law 23/1992).
Surety&Bonds.com is an online agency with a legal license to issue surety bonds for insurance brokers anywhere on the Iberian Peninsula.
Although most insurance brokers work ethically, professionally, and according to the laws of the sector, insurance contracting is associated with a high level of risk for clients, who need to reveal personal and confidential information to their insurance brokers.
For this reason, it is necessary to have a surety insurance to be able to obtain the license and/or permission to carry out the activity as an insurance broker. Generally speaking, most insurance policies for insurance brokers allow injured parties to file a claim with an insurance broker if they commit one of the following errors:
- Use false or inflated quotes to increase profits.
- Coerce customers to contract unsuitable insurance products.
- Encourage customers to declare erroneous information in insurance applications.
- Encourage customers to report erroneous information about their financial situation on insurance applications.
It also guarantees the economic responsibilities derived from the disposition of merchandise without the previous payment of tariffs. Customs traffic is governed by strict laws that affect all companies engaged in exporting and importing goods.
The principle ones are:
- Community Customs Code, Regulation (EEC) No. 291/92.
- Provisions for the application of the Community Customs Code, Regulation (EEC) No. 2454/93.
- Modifications to the Customs Code.
- Article 94 Regulation (EU) 952/2013 of the European Parliament and of the Council of October 9, 2013 establishing the Customs Code of the Union (UCC).
It serves as a guarantee against the waranties required to obtain the authorization to operate as a temporary employment agency.
SURETY INSURANCE ACCORDING TO
OBLIGATIONS TO THE PUBLIC ADMINISTRATION
A bond to ensure the completion of the tender process presented by the client to contract a certain work or service offered by the administration.
Bonds for execution of works or provision of services
They guarantee the proper execution of the contract in the agreed conditions as well as the guarantee period that can be established.
This type of guarantee or surety bond offers a series of guarantees required by the State. The so-called bonds for connection to the electricity grid, guarantee that the developer does NOT desist and collaborate actively with the Administration during the construction of the photovoltaic plant or solar plant, until the projected facilities are put into service.
The different companies that have projected photovoltaic installations with connection to the electrical network will be of two possible types:
- Type I. Facilities that are located on roofs or facades of fixed structures such as buildings, warehouses or parking structures and that are located on an urban plot. These facilities are divided into two subtypes:
- Type I.1: power less than or equal to 20kW.
- Type I.2: power greater than 20kW.
- Type II. All facilities not included in Type I above.
In this system, the interested parties bid down to complete the quota of the energy exchange. Once completed, the bids are ordered from lowest to highest to extract the price of the set, which will be that of the highest bid. This measure is expected to facilitate access to new investors, increase competitiveness and find a technologically neutral balance, without distinguishing the different sources of renewable energy.
To participate, the financial conditions of the company are taken into account. In fact, to access an energy auction, specifically renewable energy, it is necessary to submit an endorsement to gain access to the auction.
According to this draft, the guarantees to participate have gone from €20/KW to €60/KW to avoid the presentation of reckless offers. A surety bond for renewable energy auctions is a good option for those investors who want to bid in the energy market.
This insurance allows you to guarantee the payment of the deferral referred to in each case, such as: Corporation Tax, Economic Activities Tax, VAT and Social Security, among others.
This type of guarantee or surety insurance is presented to the State Agency of the Tax Administration, as a joint guarantor, to respond to the obligations that arise. Valid for the entire scope of the community in response to the obligations derived from the intra-community circulation of the products issued.
The guarantee covers the amount of the fees that may arise as a result of the incidents that occur in the circulation of goods subject to special taxes for this activity, from the import customs office to the establishment.
This type of guarantee is valid for intra-community activities. They are issued annually and are renewable, and at the end of the year they are regularized based on the average billing of the last three years.
SURETY INSURANCE FOR
It is usually contracted by companies that want to early deliver such subsidies as an aid to finance their project and not wait for the conclusion of the same to receive such subsidies.
This way, the company avoids taking on (almost always with its own resources) the planned investment or, at least, part of it, since it would receive the subsidy in advance.
The advantage is that it serves as a financial aid and since it is a technical guarantee, it does not accumulate bank risk, which does not affect its indebtedness capacity.
Additionally, with this type of bond, the Administration guarantees the successful endorsement of the subsidies that the company will receive. Subsidies can be from local authorities or Central Administrations, from the Agency for Innovation and Development of Andalusia (IDEA) or from the Spanish Agricultural Guarantee Fund (FEGA). There are different types.
With our advice, you do not have to pledge any amount until receipt of the funds, so it does not immobilize capital in your bank.
It is a compulsory insurance contract by the Building Management Law, whereby the developer is obliged to contract it and falls on the private developer or the manager of the cooperative, according to the nature of the work. It must guarantee that the advances delivered by the buyer (usually 20-30%) are being used to undertake the works, so it is a guarantee for the buyer of the home, who can be compensated in case of default by the developer or cooperative.
Additionally, there is the possibility of having a surety insurance for housing developments by real estate developers as well as by cooperatives managed by a manager. From the construction license (including payments to the reserve account).
The retention of work as collateral in construction, regulated by Law 38/1999 of November 5, established in article 19, in section a), the subscription of a surety bond or material damage to be guaranteed for one year, the reimbursement of material damages for defects or defects of execution that affect elements of completion or the completion of the works, which may be replaced by the retention by the developer of 5% of the amount of the material execution of the work.
Additionally, in the same Law and article, but in section b), it establishes the contracting of a material damage insurance or surety bond for three years to guarantee the compensation for damages caused by defects or defects of the building's elements or facilities that cause the breach of the habitability requirements of paragraph 1, letter c), Article 3.
In public works, it is common for the Agency to anticipate the payment in accordance with the budget for the purchase of the materials and machinery necessary to carry out the work. Likewise, said Organizations will request a performance bond from the corresponding company, backed by a specific surety insurance.
The bond insurance for construction waste is presented to the corresponding body of the Autonomous Community or the City Council.
BETWEEN PRIVATE INDIVIDUALS
This is common in cases of rental income, repayment of loans, payment of other types of income, etc.
Additionally, they are an agile instrument, easily accessible and in which a third person (the insurer) acts as guarantor, translating into a greater guarantee for the insured in case of insolvency or bankruptcy of the policyholder.
This type of judicial guarantee is necessary to present appeals for sentences for labor dismissals, disputes, or dissatisfaction with the payment of taxes, convictions with suppliers or customers, sanctions for competition, and tax sanctions.
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