What is a Bid Bond, Construction Bid Bond, Contract Bid Bond?
A Bid Bond or also know as a Construction Bid Bond or Contract Bid Bond is important Bond as it provides a guarantee to the employer that you can comply with the bid and also that you can accomplish the job as laid out in the contract/can implement the project once you are selected during the bidding process.
Normally, employers do not know if a contractor is financially stable or has the necessary resources to take on a project. The Bid Bond gives them reassurance; leaving them safe in the knowledge that, if the project fails, they can collect compensation from the bond.
How do Bid Bonds work?
Requesting a Construction Bid Bond will keep contractors from submitting frivolous bids, because they would be obligated to perform the job, or at least pay the bond premiums.
Our underwriters perform comprehensive credit and financial reviews before agreeing to provide bonds for an applicant company.
During bidding, various contractors estimate what the job will cost to complete. They submit this price to the employer in the form of a bid. This usually means that the bonding company will pay the employer/beneficiary the difference between the lowest and next lowest bid.
What We Require From You
Provide us the details of the particular operation which is the subject of the bond requirement, including bond amount and period for which it will be required, together with a completed application form plus:
A copy of the bond wording required by relevant body
A copy of your last published audited accounts (if you are part of group accounts, too)
A copy of your latest management accounts
On receipt of this information, the application will be submitted to our panel of underwriters for their consideration. On the successful underwriting, we should be in a position to offer competitive non-binding indications of terms, as quickly as possible.
Once you have accepted our terms and provided any additional information requested, we will send you any legal documents that need to be executed (such as counter-indemnities) and an invoice for the premium.
Following receipt of the legal paperwork and premium, we will issue the bond.