ZInsurance of Bank Guarantees Related to Exports and Investments

The bank guarantee is bank's obligation to satisfy the beneficiary (entitled entity) up to a certain financial amount depending on the contents and conditions of guarantee. The beneficiary may be the importer or importer's bank.

The bank guarantee shall be issued by the bank based on exporter's (mandator's) request in view of the conditions of concluded export contract or announced tender. Most frequently, the banks issue guarantees for Czech exporter's bid (Bid Bond), for returning the advance payment by importer (Advance Payment Bond) and for the proper performance of export contract (Performance Bond). Also other types of guarantees may be issued in connection with conditions of acquiring or performing export contracts.

The bank is insured hereby against the risk of unauthorised and optionally also authorised drawing from the guarantee by the beneficiary, to the benefit of which the guarantee is issued.

The insurance subject is the bank guarantee issued by the insured bank on behalf of mandator in connection with acquiring or performing credit contract.

The insured event is unauthorized drawing from the guarantee and authorized drawing if agreed so in the insurance policy. Unauthorized drawing is drawing without exporter's violation of its duties following from export contract or from tender conditions and also drawing due to territorial and other non-commercial reasons having the character of Force Majeure. Authorized drawing is drawing due to exporter´s failure to perform its obligations.

The premium amount depends on the value and term of insured guarantee, risk rating of exporter, evaluation of risk exposure of the country or territories associated with the export contract performance, tender conditions, kind of guarantee and deductible.

The preliminary premium calculation is available through interactive calculator.

• The share of value of supplies with the origin in the Czech Republic in the total export value – rules you can find here,
• in case of advance payment guarantee exceeding CZK 50 mil. the purposefulness of drawing advance payment will be checked at cost of insured bank by an independent inspection company determined by the bank (for a lower value of guarantee, this inspection will take place upon EGAP' request)
• trouble-free credit history1 of guarantee mandator
• unambiguous mandator's duty to assure for beneficiary a guarantee as per the conditions of the export contract or conditions of competition
• the guarantee is not in contradiction with international commercial usage for bank guarantees
• the guarantee value does not exceed the percentage share of the total export value usual for individual types of guarantees based on international commercial usage
• Subject2 has existed and executed the activity being the subject of export, minimally for 2 years before submitting the application for insurance of bank guarantee or its activity follows up his legal predecessor's activity, carried out minimally for 2 years before submitting the application for insurance of bank guarantee.