Policy snapshot
This bond guarantees that the contractor will properly use the advance payment made by the project owner and will refund it if contractual obligations are not met.
What is Advance Payment Bond?
Advance Payment Bonds assure the owner that the contractor will utilize the advance strictly for project purposes. Misuse or default leads to recovery through the bond.
What can it cover?
- If the contractor misuses or fails to repay the advance as per contract terms, the insurer reimburses the project owner. It ensures financial discipline and proper mobilization of resources at project start.
Who should consider it?
- Contractors availing upfront mobilization funds, EPCs in road, rail, power, or irrigation sectors, Companies working on World Bank or ADB-funded projects.
Key features to understand
- Required when contractor receives mobilization advance
- Typically 5–25% of contract value depending on advance given
- Valid until advance is adjusted or project milestone achieved
What deserves attention before you buy?
Coverage, exclusions, sub-limits, deductibles, waiting periods, warranties and underwriting can vary between insurers and policy versions. The policy wording and schedule remain the definitive contract. Novo can help you review the relevant terms for your requirement.
Read the wording, not just the brochure
The schedule and policy wording determine the actual contract.
Compare meaningful differences
Look at exclusions, limits, deductibles, conditions and claim requirements—not premium alone.
Think beyond purchase
Servicing and claims-related support can matter as much as placement.