SURETY INSURANCE
With the amendment made in the Public Procurement Law No. 4734 published in the Official Gazette dated December 05, 2017, companies were allowed to present the bail bonds issued within the scope of the bail insurance instead of the bank letter of guarantee while participating in the tenders, and it was regulated that the surety bonds issued by the insurance companies residing in Turkey within the scope of the surety insurance can also be given as a letter of guarantee in the tenders and tenders.
Surety insurance is a type of coverage that secures a business’s obligations towards public institutions or private sector projects, serving as an alternative to a bank letter of guarantee. If the insured party fails to fulfill the contract terms, the insurance company undertakes to make direct payment to the beneficiary.
With its various forms—such as bid bond, performance bond, and advance payment bond—surety insurance strengthens a company’s financial standing, protects cash flow, and provides assurance without affecting bank credit limits.
Surety insurance is the insurance-based equivalent of a traditional bank letter of guarantee. In the event that the insured fails to fulfill their obligation, the insurance company guarantees payment to the third party (beneficiary).
- The company’s financial structure (the last 3 years’ financial statements must be provided)
- The type of tender to be entered
- The company’s working relationship with banks
- The legal framework under which the tender is conducted
- The specifications document
Under a surety insurance contract, the insurer guarantees the beneficiary named in the policy against the risk of the debtor’s failure to fulfill the obligation defined in the policy, in accordance with the provisions set forth in these general terms and the specific terms of the policy. Acting as guarantor for the debtor, the insurer provides coverage to the beneficiary and, within the scope of the undertaking assumed under this contract, makes payment to the relevant beneficiary or beneficiaries.
Tenders involving the delivery of goods or products
Tenders for the provision of services
Public tenders
