At Hunter Insurance Services, we specialize in bonds and insurance protection contractors. We offer a variety of contractor bonds including Bid Bonds, License Bonds, Payment Bonds, and Performance Bonds.
Contractor Bid Bonds are used as security for bids submitted on a contract. Placing security on a bid ensures that the bidder will execute the contract at the bid price, upon award of the bid. If security is not submitted with the bid, the bid is rejected. Additionally, if the winning bidder does not enter into a contract, the security is forfeited.
Why are Contractor Bid Bonds Important?
Contractor Bid Bonds were created to keep irresponsible bidders out of the construction bidding process. Before Bid Bonds, some contractors would submit low bids to secure a contract, and then increase the price after the job had begun. Some contractors would even refuse to finish the construction project because the job was not profitable enough. Today, the majority of large construction projects require construction companies to submit a Bid Bond. Submitting a Bid Bond assures project developers that the bidding construction companies are serious about the job, and are financially able to complete the project within the amount of the bid.
Contractor Bid Bonds also guarantee that the bonding company will provide a Performance Bond to the contractor if awarded the contract. A claim can be filed if the bonding company refuses to place the Performance Bond. Bonding companies underwrite Bid Bonds with the same amount of scrutiny as a Performance Bond.
Bid Withdrawal Information
Before the Bid Opens
If a bid is withdrawn before bid opening, the bid security will be returned to the bidder. If the bidder is allowed to withdraw the bid before it is awarded, no action may be taken against the bid security or the bidder.
After the Bid Opens
A successful bidder may not withdrawal their bid after the bid opens without penalty (forfeiture of security) unless the bidder can prove by “clear and convincing evidence” that a non-judgmental mistake was made in the original bid.
Contractor Bid Bonds are typically purchased in amounts ranging from 5% to 20% of the total bid, with most around 10%. Surety companies usually require financial insurance from the owner or owners of the construction company in case the company fails to complete the contract or encounters financial hardships in the middle of a contract. Because of this, the principal’s personal financial information and credit score are usually used as part of the Bid Bond application process.
Hunter Insurance Services works with contractors on a regular basis to find the best bonds for their changing needs. We can answer any questions you have in regards to Contractor Bid Bonds, or even your Contractor General Liability Insurance Policy. Call us at 855.280.8262 or complete the form at the top of this page for your free Contractor Bid Bond quote.