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Bid Bond

Your Guide to Bid Bonds

What is a bid bond used for? Project developers have contractors file bid bonds to guarantee they provide serious bids and are financially stable enough to complete the project.

To put it simply, a bid bond is used as financial security for contract bid proposals — especially for large projects such as commercial developments. Without filing the required bond, a contractor’s bid will automatically be disqualified from the bidding process.

How Much Do Bid Bonds Cost?

Bid bonds are a flat fee of $100 per contract. After winning the bid a performance bond for the contract will be needed. Performance bonds are typically priced at a rate of 3% of the bond amount.

The Process to Apply for a Bid Bond

If a specific form is required, it should be included in the bid packet you received from the project owner. Otherwise, your SuretyBonds.com surety specialist can use a standard application, which includes the following questions:

If you plan to submit a bid above $250,000, there will be additional financial credentials needed to process your application.

Your underwriter will issue the bid bond once financial records have been reviewed, the application has been approved and payment has been received. Apply for your bond now.

Learn More About Bid Bonds For Construction

There was a time when contractors would submit low bids to secure a contract, then increase the price as the job progressed or refuse to complete the project altogether because they had underbid themselves. To combat this problem, project owners began requiring bid bonds, which are a specific type of contract surety bond.

There are three parties involved in the bid bonding process:

A bid bond benefit project owners in two key ways:

How To Withdraw Your Bid Without Losing Your Bond

Contractors can only withdraw a bid without losing the bid security (a.k.a. bond) if the withdrawal happens before the developer opens the bid. Sometimes developers might allow a bid to be retracted before it is awarded without taking action against the bidder. However, once the bidding is complete and a contract is awarded, any bid withdrawal will result in the automatic loss of the bid security.