How to Get Construction Bid Bonds

By Crissa Bulao

Working in your own contractor business or as an employee in a construction company means continually building a reputation for excellence. Not everyone manages to do so.

Because of this reason, project owners who are searching for construction companies require you to provide a bid bond if you want to be able to compete for getting the project. In this article, we’re talking more about what bid bonds are and your company can get one. Follow up and learn more!

What is a bid bond?

A bid bond is a guarantee by the bidder that they are going to conclude the contract that they bid for. If it happens that you cannot complete the project, and your client or the project owners are chosen as bidding winners, they will activate the bond.

Since construction companies are often working on projects that require millions of dollars, we all need some guarantee that the work on the project done for months won’t be lost just because the project couldn’t be completed. The bid bond guarantees that the contractors are going to conclude the contract, but if you don’t, the owner will charge you a certain percent.

How do you get bid bonds?

There are two main ways to get bid bonds: through banks or insurance companies. Choosing a bank or an insurance company to provide a bid bond for your contractor business, means this institution becomes a valuable part of the deal between the project owner and the bidder (you).

Let’s say that you choose to work with the insurance company through which you already have an insurance plan. Since you have already been working together, the insurers will know if the contractor is eligible to get the bond. The insurance company will create a bid bond that will serve as proof in the bidding process.

When the deal is ready to be concluded, the insurance company, through the bid bond, will stand guarantee for your construction company until the contract is signed.


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When and why is the bid bond activated?

When the project is open, the owner typically asks for the bidders to provide the bond if they want to compete. In case the bidder draws back after they applied, the bid bond will be activated.

Depending on the project and the project owners, the percent asked in the bond can be different. Private entities usually ask from 5% to 10% of the total amount offered for completing the project. The federally funded project owners ask for 20%.

If the contractor fails or refuses to continue working on the project, this money will be charged by the project owner.

Get your Bid Bonds From Your Bank or Insurance Company

If you need a bid bond, you go to an insurance company or the bank. You provide the details about the job you’re competing in, and the rest will be done by them.

One bid bond can serve for only one project. That’s why the bank or the insurers will write it exclusively for each job. All you need to do is provide proof that you’re eligible for one. Good luck, we hope you win the project!


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