Iloc

[lifeisgood]

I was approved for a bond but they are requiring an ILOC. What is that?

[marietta68]

Originally Posted by lifeisgood

I was approved for a bond but they are requiring an ILOC. What is that?

Irrevocable
Letter
of
Credit

[Bond Magician]

Originally Posted by marietta68

Irrevocable
Letter
of
Credit

What does the ILOC's purpose?

[marietta68]

Originally Posted by Bond Magician

What does the ILOC's purpose?

The purpose of the ILOC is to ensure that, in the event of a claim, the bond company can satisfy the claim as quickly as necessary. Bond companies are sometimes given an unreasonably short window in which to respond to a claim. A letter of credit doesn't necessarily make a poor credit risk acceptable but instead will allow the surety company to react to a claim without jeopardizing its standing as an admitted bond writer in a particular state or jurisdiction. Sometimes an ILOC in an amount greater than the bond amount is required to cover potential expenses.

[Admin]

Honestly, if a bonding company requires an ILOC, there are typically better options.

For instance, you could try and post the ILOC directly with the obligee. They willl likely release it sooner than the surety and you wouldn't have the cost of the bond.

Sometimes there are trust funds you can do in lieu of the bond like for freight brokers.


It is rare that a bond with an ILOC requirement is your best bet, but that is typically when it is your last option.