An insurance guarantee is a contract for which an insurance company acts as a guarantor of a creditor. Here is who can request it and how to do it.
What is the insurance guarantee?
An insurance guarantee is a legal contract between an insurance company and a creditor. According to this contract, the insurance company assumes a debt of the creditor, for an amount established following a negotiation between the parties, namely: the creditor, who is usually a customer of the insurance company; and the insurance agency, which must be authorized to provide this service, which assumes the role of guarantor. The creditor of the debt will become the beneficiary of the surety.
In practice, the insurance agency, through the insurance guarantee (or bank guarantee insurance or surety insurance), acts as a guarantor of the debtor, assuming the risk of default (on the part of the debtor himself) and paying the due to his creditor, to then assert his right to collect the sum relating to the debt he has paid off.
The cost of the surety, or the total interest that the contractor must pay for the service, is established in the surety policy at the time of signing the contract.
Who can apply for an insurance guarantee
Those who request an insurance guarantee policy are usually already a customer of the company they are addressing: with the latter they may have previously activated, for example, a car or life policy. In this case, the process of requesting and obtaining this service is decidedly simpler and more immediate because the company has no problems verifying the economic reliability of the applicant.
Although faster, the verification process is in any case carried out because the company must ensure that the applicant has no outstanding debts that make him deem a subject at risk of default. For a party deemed to be at risk of default, if the company decides to take the risk equally, the interest rate will be higher.
An insurance guarantee can be requested for various reasons therefore the type of guarantee policy varies according to the purpose for which it is requested. For example, there are insurance sureties for VAT reimbursement, surety policies for rent, or surety insurance for public tenders.
What documents are needed to apply for an insurance guarantee
To request surety insurance, the applicant must submit, by law, documentation similar to that provided for requesting a bank guarantee.
If a private individual is requesting the insurance policy, the following documents are therefore required:
- an identity document;
- the tax code;
- an income document, 730 or CUD;
- the last two payslips.
If, on the other hand, a company is requesting the insurance policy, the following documents are required:
- an identity document of the director of the company;
- the company’s VAT number;
- the corporate balance sheet of the last 5 years;
- the Single Model;
- the company’s balance sheet;
- the updated accounting situation.