Bond TypeContractor Bid Bonds
What are bid bonds?
Bid bonds are a type of contract bond required of any contractor that files a bid on a project. The bid bond ensure that the bid is serious and the contractor has the financial stability to complete the project. If a bid is filed without the proper bond, the contractor’s bid will be automatically disqualified from the bidding pool.
Who do bid bonds benefit?
Bid bonds protect the developer from being scammed by contractors. Any developer that receives a bid accompanied by a bid bond can be sure the surety backs the work of the contractor. Bid bonds also ensure that if a contractor with the lowest bid is awarded the contract and backs out, the developer can make a claim on the bond to recover the different of the lowest bid and second-lowest bid.
How much does a bid bond cost?
Bid bonds can be obtained at a flat fee of $100 per contract. If a contractor’s bid is chosen by the project owner, they must obtain a performance bond and/or a payment bond. Performance bonds are typically priced at a rate of 3% of the bond amount.
Information needed on your bond application
Personal credit score and financial history may be required on bid bonds with amounts over $250,000
You can get a free, no-obligation quote for a bid bond by applying online or by calling a contractor bond expert at 1 (800) 308-4358.
The difference between bid, payment, and performance bonds
Bid bonds are required of a contractor when submitting a bid on a project to ensure the contractor’s financial backing and capabilities as a worker.
A performance bond is required to ensure that every project is completed according to the terms outlined in the agreed upon contract.
A payment bond is required of a contractor to protect all suppliers and subcontractors working under them to ensure proper payment.