Surety Insurance
Security and Liquidity for Your Business
Security and Liquidity for Your Business
Financial Flexibility Without Tying Up Capital
In today’s fast-moving economy, maintaining financial flexibility is key—without having to sacrifice necessary securities. Surety insurance offers a flexible and cost-effective alternative to traditional bank guarantees by securing your company’s contractual obligations to third parties—such as rental guarantees, performance bonds, or warranty bonds.
Unlike bank guarantees, surety bonds do not impact your credit line with your bank, helping to preserve your liquidity. This creates greater financial freedom for operational investments and strengthens your company’s ability to act and grow.
At Breffka & Hehnke, we draw on years of experience in the surety market. We develop tailor-made surety solutions that are precisely aligned with your company’s requirements—ensuring long-term success and healthy growth.
Secure a strong foundation for your business objectives—with our support and contract protection that preserves your financial freedom.
What Is Surety Insurance?
Many companies face the challenge of providing financial guarantees for contracts, projects, or tenders. This is especially common in industries such as construction, mechanical engineering, and professional services, where clients require bonds to secure contractual obligations.
Traditional solutions like bank guarantees often tie up capital and reduce liquidity—by requiring cash collateral or drawing on a company’s credit lines.
Surety insurance offers a smarter alternative: the insurer issues a bond certificate on your company’s behalf—without cash deposits and without impacting your bank credit line. This keeps your funds available and protects your liquidity.
You also benefit from fast and flexible processing, as surety bonds often come with less bureaucracy and more favorable terms than traditional bank guarantees. They enhance the confidence of your business partners by offering reliable security while expanding your financial flexibility.
Benefits of Surety Insurance
- Preserves Liquidity: No capital tie-up from cash deposits or bank guarantees
- Increased Financial Flexibility: Bank credit lines remain available for other investments
- Creditworthiness Boost: Strengthens your reputation with clients through solid bonding
- Fast Processing: Less paperwork and shorter approval times compared to bank guarantees
- Cost-Effective: Often lower premiums than typical bank guarantee fees
Common Types of Surety Bonds
- Warranty Bonds: Secure against potential defects after project completion or product delivery
- Advance Payment Bonds: Protect prepayments from loss due to non-performance
- Payment Bonds: Safeguard suppliers and service providers against client payment default
FAQs on Surety Insurance
Surety insurance protects your contract partners against financial losses if your company fails to meet its contractual obligations. The insurer pays up to the agreed bond amount. However, it does not cover losses resulting from fraud or intentional misconduct.
A surety insurance policy protects your contractual partners against financial losses if your company fails to meet its contractual obligations. The insurer will cover payments up to the agreed bond amount. However, it does not cover losses resulting from fraud or intentional misconduct.
Applying for and issuing a surety bond is generally faster than obtaining a bank guarantee. After a credit assessment and approval, the insurer issues the required bond certificate.
Surety insurance is especially useful for businesses that regularly need to provide guarantees. It is essential in industries where financial security is required to back contractual performance, such as:
- Construction and trades: For performance, warranty, and contract fulfillment bonds
- Mechanical and plant engineering: To secure down payments and long-term contracts
- Service providers and suppliers: For contractual performance and payment protection
- Companies participating in tenders: For bid bonds and contract execution guarantees
- Businesses looking to preserve liquidity and credit lines: Avoiding capital tie-up
- SMEs with limited financial reserves: Gaining flexibility to grow and invest
Small and mid-sized enterprises, in particular, benefit from the flexibility and protection that surety insurance offers. It enables them to take on projects confidently—without compromising liquidity or operational capacity.
Surety insurance offers several key advantages over traditional bank guarantees:
- It does not affect your company’s credit line
- It does not require cash collateral or frozen capital
- It preserves financial flexibility for operations and investments
- Approval is often faster and less bureaucratic than with banks
- It enables efficient use of financial resources, especially for SMEs
