Letter of Guarantee Insurance
Canadian exporters must provide bonds to their foreign buyers. These are provided in a form of letters of guarantee or standby letters of credit. This is done to protect the accepted obligations taken under the contracts. When bonds are issued by financial institutions, you are required to provide a collateral supporting them. Usually, a portion of the line of credit is carved out for covering the collateral amount. This can severely affect the working capital allotted to carry out general operations.
This credit problem can be solved using performance security guarantee. It provides a complete unconditional and irrevocable guarantee to the financial institution. This will allow you to access your working capital and free up financial capacity under a cash reserve or credit line.
A performance security guarantee is issued essentially on bonding line. Different types of obligations are covered under this guarantee. Contractual obligations are the most common one.
3 reasons to purchase account performance security guarantee
Performance Security Insurance
Performance security insurance is offered to compliment performance security guarantee. It is specifically designed to protect you from your buyers if they make a call against the letter of guarantee or standby letter of credit without any reason. In a case like this, performance security insurance will indemnify losses up to 95% of the losses as long as you have not breached the obligations mentioned under the contract. Performance security insurance can be used on its own or tied up with performance security guarantee.
For more information on Contract Frustration Insurance, or to discuss your existing insurance policies, please call at 416 484-4545 or email us at email@example.com.
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