What is a Bid Bond?
Bid bonds are very common in the commercial construction industry and function as a safety net for project owners and developers that the contractors that bid on the project will follow through with signing the contract as expected.
Bid bonds assures the developer or project owner that the contractor they select will honor their bid. If the contractor does not honor their bid, the bid bond will compensate the project owner for having to select the higher bid.
Bid bonds are legal agreements between 3 parties:
The Principal (contractor that is submitting a bid) will acquire a Bid Bond from the Surety. The Principal will submit their bid and Bid Bond to the Obligee in hopes of winning the bid. The Surety financially guarantees that, if the Principal wins the bid, they will follow through on honoring their bid. If the Principal does not follow through, then the Surety will pay up to the bond amount to the Obligee and the Obligee can use those funds to hire another contractor for the project.
Click below to go to our innovative bond portal. You can quote, bind, and issue a bond in less than 5 minutes! Note that some types of bonds and higher bond amounts aren't eligible for online instant issue and will require additional underwriting.
Bid bonds assures the developer or project owner that the contractor they select will honor their bid. If the contractor does not honor their bid, the bid bond will compensate the project owner for having to select the higher bid.
Bid bonds are legal agreements between 3 parties:
- Obligee (Project Owner or Real Estate Developer)
- Principal (Proposed Contractor)
- Surety (The Company Issuing the bond)
The Principal (contractor that is submitting a bid) will acquire a Bid Bond from the Surety. The Principal will submit their bid and Bid Bond to the Obligee in hopes of winning the bid. The Surety financially guarantees that, if the Principal wins the bid, they will follow through on honoring their bid. If the Principal does not follow through, then the Surety will pay up to the bond amount to the Obligee and the Obligee can use those funds to hire another contractor for the project.
Click below to go to our innovative bond portal. You can quote, bind, and issue a bond in less than 5 minutes! Note that some types of bonds and higher bond amounts aren't eligible for online instant issue and will require additional underwriting.
What does a Bid Bond Cost?
Believe it or not, Bid Bonds are actually free of charge. If you win a bid, then you would have to pay for a performance bond. A Performance Bond will replace the bid bond once your bid is accepted. The Bid Bond assures that you meet the obligations of your bid bond while a Performance Bond ensures you will perform the project according to the terms and conditions of your contract.
Click below to go to our innovative bond portal. You can quote, bind, and issue a bond in less than 5 minutes! Note that some types of bonds and higher bond amounts aren't eligible for online instant issue and will require additional underwriting.
Click below to go to our innovative bond portal. You can quote, bind, and issue a bond in less than 5 minutes! Note that some types of bonds and higher bond amounts aren't eligible for online instant issue and will require additional underwriting.