Claims – the guarantor has the exclusive right to determine the claims, liabilities or actions he pays. This Decision shall be final and binding. The guarantors decide which claims are to be paid without the consent of the customer or persons entitled to compensation. Default – is considered a period during which the investor or beneficiary of the compensation does not pay an obligation premium, loses a contract of obligation, subcontractors do not pay the labor and materials necessary for the customs contract, does not comply with the GIA, declares bankruptcy and usually does anything that interferes with the rights and well-being of the guarantor. Almost all general compensation agreements contain a basic presentation of the facts. Statements of fact usually state that you have asked for a guarantee to pay a bond and that those entitled to compensation have an economic interest in receiving the bond. The GIA then generally deals with promises and agreements concluded taking into account the issuance of bonds. These promises and agreements vary between each guarantee company and its respective GIUs. In general, they include, but are not limited to, the payment of premiums, the payment of losses incurred by the guarantor as a result of the issuance of the bond or the execution of its provisions, reserve deposits, asset and file audits, other elements important to the relationship between the guarantor and the client. This statement should only be used as an example of the points that an IAM may contain, and each client should read their lawyer and consult them on the language contained in their specific IAM.
The guarantor is entitled to compensation for all payments made in good faith. If the persons entitled to compensation and the client wish to assert a claim, they must deposit a guarantee with the guarantee, which includes all costs and attorneys` fees. A general indemnification contract (GIA) is a document that describes the guarantee/customer relationship. IGAs usually refer to promises and agreements where the beneficiaries agree to abide by them by signing the GIA and the guarantee company issuing the bond. In most cases, the guarantee company asks you to sign its GIA before issuing your warranty. This is a very common question and the justification is usually that he/she has nothing to do with the company that needs the warranty. The best answer to this question is that the guarantee company strives to obtain a full compensation scheme with regard to the personal compensation of owners and spouses. This protects a guarantee company when a spouse transfers all the assets in his or her name to the name of his or her spouse.
The process is very similar to obtaining a bank loan, which the bank would try to claim the same position. We live in interesting times, uncertain times, anxious times. It is difficult to predict what will happen to the secured loan in the coming COVID-19 months (years). However, it is likely that guarantors will rely more than ever on the General Compensation Agreement (GIA). As with any contract, it is far better for our client to read and understand the provisions of the GIA and, if necessary, to seek legal assistance before performance than to receive a potentially unpleasant “surprise” later when the guarantor tries to assert his contractual rights. Understanding the unknown brings clarity and a kind of peace that we are all looking for during this unprecedented pandemic. A GIA is a standard document in the construction and surety industry. A guarantee company that issues a bond on behalf of a contractor or subcontractor almost invariably needs its principal, the people who control the business, their spouses, and often affiliates to perform the IAM. By issuing his guarantee, the guarantor ensures that the customer will respect his obligations; And if the customer does not do so, the guarantor must intervene and bear the costs for the satisfactory execution of the contract and the payment of the money due and due to the customer`s subcontractors and suppliers. Although a contractor or subcontractor is required, under the common law bond capital, to indemnify and relieve the guarantor of losses incurred by the issuance of a bond, a guarantor will not avail himself solely of these common law rights. The required GIA provides the guarantee with contractual rights that extend its common law rights vis-à-vis the individual and the compensation of the company. In addition, the GIA provides the guarantor with an instrument to ensure the customer`s cooperation.
A guarantee is not like traditional insurance; It`s more like a loan extension. By issuing a bond, a guarantor makes his loan available to the investor so that the principal can conclude a contract with the creditor. Since the guarantor grants his bond loan on behalf of his principal, the guarantee insurer assesses the financial capacity and the principal`s ability to perform the contract. However, the guarantor does not expect a loss due to the issuance of the bond. Because of the protection afforded to the guarantor in the GIA, in addition to the common law rights of the guarantor, the persons who commit and the third parties compensating, whether natural or commercial entities, are obliged, among other things, to compensate the guarantor if the guarantor suffers harm because he has issued obligations on behalf of the client. The GIA is a powerful tool that enhances the guarantor`s goal of avoiding losses in claims settlement and search and rescue. Clients should understand that the courts will generally apply the provisions of an IAM as written. Contractors and subcontractors who execute such agreements should be aware that the GIA grants rights and remedies favourable to the guarantee granting the loan in the event of loss and assigns responsibilities and obligations to the principal for whom the loan is granted and to the persons compensated, including spouses. The specific conditions of the GIA vary from one warranty company to another, but most GIAs contain some typical clauses. Prudence requires a bond investor to understand the terms of an IAM before executing the agreement.
When executing this document, the guarantor almost always requires that it be signed by all owners, both for the company and personally, and their spouses, which can alarm some people. In the case of the guarantor, he must seek full compensation from all owners and spouses in order to protect himself from a situation where one of the spouses can transfer property to another spouse in order to prevent the guarantor from having access to it in the event of loss. Yes, each insurance company has a specific GIA. In fact, some insurance companies have multiple GIA forms that can be used to get compensation from you or your business. The most popular GIA is a so-called abbreviated compensation agreement. .