Aim

• Guarantees the performance of a contract or other obligation
• It is a three-party instruments by which one party guarantees or promises a second party the successful performance of a third party.

Three-party instruments

1. Bond Company

• Usually a corporation which determines if an principal is qualified to be bonded for the performance of some act or service
• If the bonded individual does not perform as promised, the bond company performs the obligation or pays for any damages.
  

2. Principal

• An individual, partnership, or corporation who offers an action or service and is required to post a bond.
• Once bonded, the bond company guarantees that he will perform as promised.

3. Obligee (the entity requiring the bond

• An individual, partnership, corporation, or government entity which requires the guarantee that an action or service will be performed.
• If not properly performed, the bond company pays the obligee for any damages or fulfills the obligation.

No Renewal and No Expiry Date

Market

It is very niche that most of insurers are not interested in underwriting this insurance business.  It is usually a single payment subject to the factual market situation at the time of application.

Remarks:
There are many conditions, exclusions and warranties that can be applied for these policies. It is therefore important that you discuss with your insurance adviser any that are applicable to your policy.