Bid Bonds
Securing Your Clients’ Competitive Edge in Construction Bidding
What is a bid bond?
A bid bond is a type of surety bond that provides financial assurance to the project owner (obligee) that the contractor (principal) will honor their bid and execute the contract at the bid price if selected.
It protects the obligee from financial losses if the contractor fails to proceed after winning the bid. Bid bonds are typically required for public construction projects and are increasingly common in the private sector.
Why Bid Bonds Matter for Your Clients
Demonstrate Credibility
Bid bonds showcase your client's reliability and financial stability, increasing their chances of being awarded contracts.
Compliance with Requirements
Many project owners mandate bid bonds as part of the tendering process. Ensuring your clients have them keeps them eligible for more opportunities.
Financial Protection
They protect project owners from losses due to contractors withdrawing bids or failing to provide necessary performance bonds.
Competitive Advantage
Offering bid bonds can set your clients apart from competitors who may not have secured bonding, positioning them as professional and trustworthy.
How Bid Bonds Work
Bonding Facility
A contractor will need to have a bonding facility in place to receive bonding support.
Underwriting
The surety assesses the contractor’s financial stability, experience, and capacity to complete the project.
Issuance
One approved, a bid bond is will be issued for the project.
Tender Submission
The contractor submits the bid bond along with their bid proposal.
Awarding the Contract
If the contractor wins the bid but fails to enter into the contract, the project owner can claim against the bid bond.
Why Choose Approved Casualty & Surety for Builders Risk Insurance
Expert Advice
Provide insights on the requirements and benefits of bid bonds.
Streamlined Applications
Assist in gathering necessary documentation to expedite the underwriting process.
Access to Markets
The Surety specializes in the contract and construction bonding in general.
Ongoing Support
Offer continued assistance with subsequent bonds like performance and payment bonds if the bid is successful.
Partner with Specialists for Optimal Results
Collaborating with experts in surety bonds ensures your clients receive the best possible service and competitive rates. By partnering with a knowledgeable MGA, you can expand your offerings without the need to develop in-house expertise.
Contact Us Today
Empower your clients to bid confidently on construction projects. Reach out to our team of surety experts to learn more about securing bid bonds and enhancing your clients' success in the industry.
FAQs about Bid Bonds
What information is required to obtain a bid bond?
Contractors will need to have a Bonding facility in place to be able to get bid bonds.
Are bid bonds refundable if the bid is not won?
A Bid bond will expire or will not be required if the contract is awarded to another contractor.bonds as part of the agreement.
How long does it take to get a bid bond issued?
We use a 72 hour rule, it also depends on if addtional financial updates are required.
What happens if a contractor withdraws their bid?
If a contractor withdraws after the bid opening, the obligee can claim against the bid bond to cover the difference up to the bond amount. Normally 10% of the bid price.
Can small contractors obtain bid bonds?
Yes, with proper financial documentation and support, small contractors can secure bid bonds suitable for their capacity.
