Guarantor

What Does Guarantor Mean?

A guarantor is a third party in a contract who agrees to take responsibility for certain liabilities if one of the other parties defaults on their obligations. Guarantors are sometimes involved in insurance contracts, where they essentially provide a form of security or assurance, stepping in to cover obligations if necessary.

Insuranceopedia Explains Guarantor

Sometimes, one party can only secure a loan or get a project approved if a guarantor agrees to cover any potential losses or liabilities. This situation is especially common in the construction industry, where large sums of money are often invested in projects, and a guarantor provides additional assurance to mitigate financial risks.