Road Bonds are a popular form of insurance in Ireland, where they are used by many local authorities.
Typically a Road Bond is taken out by a local authority during the construction of a new housing development and the bond is designed to ensure that the developer will complete all public roads needed to service a new housing development.
The value of the Road Bond is calculated by the local authority's assessment on the cost of building the new roads and the duration of each Road Bond is intended to cover the construction and maintenance periods, until such time as the roads are approved and adopted by the local Council.
Once the value of the Road Bond has been agreed, the developer then enters into a bond with a bank or insurance company such as CRL.
Road bonds can take the form of:
- Bank security
Should the developer fail to complete the roads on time or to the required standard, the Road Bond can be used by the Council to complete the project to the necessary standards.
Road Bonds in Ireland are the ideal security measure to manage the gap between the time a developer is responsible for a new road and the time when the local Highways take over operation and management of the road under public expense, under a Section 38 (s38) Agreement.