If a foreign shipowner orders a vessel to a domestic shipbuilder, the bank guarantees payment on behalf of the shipbuilder for the Advance Payment made before the delivery of the vessel.
The shipowner pays the shipyard an Advance Payment when ordering the vessel. RG (Refund Guarantee) insurance is then purchased with a bank or insurer in case the vessel is not delivered as contracted. If the shipowner goes bankrupt or the vessel is not properly delivered, the shipowner may receive an Advance Payment from the financial institution on his behalf.

Shipbuilders, Shipping Companies