Phillip Krinker

Types of Surety Insurance

Surety insurance can be used to meet public and private demand, and it is the option chosen due to ease of placement, cost, and because it does not place a burden on bank lines.

Due to the recession faced by Brazil during the past few years, judicial guarantee insurance showed considerable growth and boosted Guarantee insurance in Brazil. Judicial Guarantee is regulated by Ordinance PGFN n°164/2014, which establishes a few rules for this type of policy, such as the policy period that must be from two to five years, and a 30% increase on the value of the action.

Judicial Guarantee insurance policies can be used in tax proceedings, both federal and state, civil proceedings, labor proceedings, appeal deposits, and administrative proceedings, like for instance tax credit cases.

The Traditional Guarantee insurance was one of the most used forms of guarantee insurance in Brazil prior to the recession, because its purpose is to cover performance contracts, bids, advance payments, payment retentions, customs guarantees, and tax suspension.

Then we have the financial guarantees, which can be provided if there is the risk of non-payment by a lessee, FINEP contracts, electric power purchase and sale contracts, stock guarantee, and completion contracts, among others.

Guarantee insurance has been gaining ground in the real estate sector, with real estate exchange guarantee insurance, which guarantees the physical handover of units. Also, Rental guarantee insurance whose main purpose is to guarantee the payment of rent to the lessor (landlord), and some additional covers can be purchased to over, for instance real estate tax (IPTU), water, light and damage to painting.

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