Performance Bonds: all you need to know

Kerry London Underwriting are pleased to be able to offer access to all our brokers to the range of Bonds we offer.  You can find out more detail by reading on, or you can watch our new video, featuring our Head of Performance Bonds, Giles Ham, who outlines all the details you need to know. You can watch the video here on Kerry London.

What is a Performance Bond?

A Performance Bond is used in the construction industry to cover damages up to a pre-agreed limit that are incurred when a customer’s contractor defaults on a contract.  If you have clients who operate in the construction industry, we’re pleased to confirm that we can work with you to help them arrange the protection they need.

We’ve got years of experience arranging Performance Bonds

We have a specialist team at Kerry London Underwriting, whose sole focus is arranging them for our brokers’ clients.  With a huge amount of experience in the field, we’re confident we can help you find the best Bond to guarantee your contractual obligations.

The team has a well-balanced make-up of both broking and underwriting experience, enabling us to craft the right terms for your Bond. In the last three years alone, we have arranged and managed more than £5 billion worth of contract value Bonds. And our relationships with the UK’s leading Surety Underwriters and niche UK specialist Bond providers, means we always know the best company to place your Bond with.

We’ll work with you to understand the unique position of your business and tailor our products to perfectly fit.  Arranging the right Bond and level of cover not only creates peace of mind, it also allows you to keep your working capital safely in the bank.

What Bonds do we offer?

There are other types of Bonds that we have expertise in arranging. Here’s a brief overview of them and what they cover:

Duty Deferment Bonds

Goods imported from outside the EU are subject to import duty tax on arrival into the UK and this payment is usually due immediately. However, a Duty Deferment, Customs Bond or Movement Guarantee Bond allows importers to defer this payment for up to 45 days, providing greater flexibility and a cash flow advantage.

Deferred Consideration Bonds

A landowner may be willing to sell land to a house builder or property developer on deferred payment terms. To give the landowner comfort, a Deferred Consideration Bond can be arranged that will guarantee payment of installments in the event that the house builder or developer defaults. This method of bonding frees up the financial resources of the house builder or developer and gives peace of mind to the seller of land.

Deposit Bonds

These act as a guarantee to investors so that their deposits/investments are safeguarded when buying or investing in developments or when buying properties off plan. This form of Surety Deposit Bond is not to be confused with Deposit Bonds for rental deposits or in lieu of cash deposit when purchasing a property.

Supply Bonds

Supply Bonds guarantee performance of a contract by a supplier to provide agreed upon supplies or materials. Project owners and/or local authorities require this type of Contract Bond to be obtained by principals in order to protect public construction projects. In the event of a default by the supplier, the surety indemnifies the purchaser of the supplies against the resulting loss of time and value. It is important to note that not all public works projects require a Supply Bond. You’ll want to check with your specific obligee to determine your bonding requirements.

Highways Bonds

If your works are in relation to a building development that involves the completion of new roads and/or sewers you may be asked to provide a cash deposit to be held until such time as they are adopted by the relevant authority. Also known as Section 38, Section 104 Sewer and Section 278 Highway Bonds, we can help by providing the relevant authority with a Bond in place of the cash deposit guaranteeing that you will complete the road, footpath, street lighting or sewer system to a standard which they can adopt.

Retention Bonds

Retention is a percentage (often 5%) of the amount due to the contractor on an interim certificate that is retained by the client. The purpose of retention is to ensure the contractor properly completes the activities required of them under the contract. Half of the amount retained is released on certification of practical completion and the remainder is released upon certification of making good defects.

If you’d like to find out more, you can get in touch with your usual contact, or email us.

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