Advanced Payment Bonds are used In order to warranty the appropriate use of an advanced payment for a servicing or purchase agreement. They will provide coverage for the beneficiary of the Project that a correct use is given to resources for that specific Project.
It is a common practice to establish between 10% to 20% of the total advanced payment amount as a sum insured for this type of bonds.
It is also a common practice to have advanced payment bonds being joined by performance bonds as warranties in public contracts.
