Why does the insurer require the owner's guarantee for a bond?

Because a bond is not classic insurance but a guarantee: if the client calls it, the insurer recovers the amount paid from the company by way of recourse. A guarantee from the owner or a related company is the insurer's additional security for that recourse – especially if, in the insurer's assessment, the company's equity or track record is not strong enough.

When this answer applies to your situation

• A new or fast-growing company without a long financial history.
• A large bond limit relative to the company's equity.
• A group structure where the assets and the contracts sit in different companies.

What can change the answer

• The company's balance sheet: equity, liabilities, liquidity.
• The size of the bond portfolio and the risk of the projects.
• Whether the guarantee can be replaced by other security (a deposit, a pledge).
• Differences between insurers – requirements are not the same across the market, so it is worth comparing.

What to check in the policy or quote

• The scope and term of the guarantee (whether it is wider than necessary)
• Which persons are required as guarantors
• The counter-indemnity agreement terms as a whole
• Whether the guarantee can be reviewed once the financial figures improve

The typical mistake

Signing the guarantee without reading the counter-indemnity agreement. Owners tend to find out about their personal liability only at the moment the guarantee is paid out.

Example

A situation typical in practice (generalised example, not a specific client)

A typical situation: a company with modest equity needs a bond limit of EUR 200,000. The insurer offers the limit against the owner's guarantee; two years later, with a stronger balance sheet, the terms can be reviewed and the guarantee narrowed.

Related content

• Bonds and guarantees insurance

This is not individual insurance advice; actual cover always depends on the chosen insurer's wording and the special conditions of the policy.