Guarantee insurance is an insurance that covers the risk incurred by the guarantor against the principal debtor.
Typical Usage
- Rent surety (rental insurance)
- Bank loan surety
- Commercial transaction surety
- Public tender surety
Insurance Advantages
- Insurance when the guarantor pays covers
- The power of recourse from the principal debtor passes to the insurer
- The personal grievance of the guarantor is reduced
Insurance Conditions
- Credibility of the principal debtor
- Debt type and amount
- Maturity
- Insurance premium (usually 1-3% of the debt)
Bank Approach
- Some banks require surety insurance
- For high amount loans
- For workplace rental guarantees
Supreme Court 11. HD
11. HD adopts that surety insurance is for the "protection of the guarantor" and that the insurer must act in accordance with the principle of honesty. Prefer (not consecutive)Insurance and obligations law lawyer recommended.