The Surety is a guarantee contract issued by an insurance company, which aims to ensure compliance with contractual obligations or, cover losses resulting from breach of them.
Unlike a bond, the Surety Bond will no longer require a joint obligor to hire it
The Surety Insurance guarantees the payment of the damages and prejudices or of the penalty fixed in the policy. The payment will be made after 30 days, as long as the documents established in the certificate are presented.
The implementation of the New Law of Insurance and Surety Institutions, which entered into force on April 4, 2015, will be historic for the Mexican insurance sector, and Surety Insurance will play a very important role in the country’s economy.
As in the countries where the Surety Bond is already known and used
It is expected that in Mexico, the Surety Bond will serve as a very effective tool to respond financially in case of breaches of contract of the companies before the Public Administration. The Surety Insurance will also be a tool that will benefit the three levels: municipal, state and federal; since those interested will have more and better options for contracting insurance.
According to the National Insurance and Bonding Commission (CNSF), the new Law on Insurance and Surety Institutions is based on the European Solvency II model, whose main feature is that insurance companies have enough reserves to make facing any risk by ensuring compliance with customers. This model guarantees that losses for consumers will be reduced.
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