Bid Bonds
What is a Bid Bond?
A bid bond is a guarantee that the bonding company will provide a performance bond to the principal, if they are awarded the contract. A claim can arise if the bonding company refuses to write the performance bond, which is why the surety will underwrite bid bonds with the same caution as they do for performance bonds. In other words, the surety will not approve a bid bond, if they are not going to approve the performance bond.
Current Market: After years of liberal underwriting practices the surety industry has returned to it's traditional methods. Bonding companies are not as willing to extend surety credit as they were at the begining of the millenium. The market has stabalized and the appetite for new business should remain static for years to come.
Special Programs: In a effort to streamline smaller contracts, some bonding companies have decided to underwrite contract bonds under $200,000 solely using credit reports. This allows new businesses and companies new to bonding to get started in the world of bonded contracts.
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