Bond Insurance
Bond insurance (also known as "financial guaranty insurance") is a type of insurance in which an insurance company guarantees scheduled payments of interest and principal on a bond or other security in the event of a payment default by the bond or security issuer.
Categories of Bonds
PERFORMANCE BOND Covers against losses or damages to a principal resulting from the inability of the insured (contractor or service provider) to perform as per the terms of a signed contract.
CUSTOM BOND It varies in nature but all guarantee payment of duty to the Tanzania Revenue Authority (TRA) if the insured fails to meet the conditions upon which a waiver of duty was granted.
For instance, a custom bond can be taken when importing goods intended for specific work, with the understanding that duty is not paid because the finished product will be re-exported. Another example is a contractor bringing construction machinery for a project and then exporting it again after the project is completed.
SECURITY BOND It is issued to expatriates against the cost that the government may incur in case the person is deported from Tanzania