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Bid Bonds
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.
Kristina Hannon (Thu, 03 Nov 2011 20:54:57 -0400): What happens if you (being the bid bond company) makes the mistake? My bid is good, all my numbers add up; I send my information to you and instead of you putting the 10%, you put a number obviously significantly less than 10%. Such as a 2.4 million dollar bid, you place $10,000 instead of 10% ($240,000). My bid thus gets rejected. Can I fight that, or am I at a loss?
Butch Obermier (Fri, 13 Jan 2012 14:23:16 -0500): I am bidding on a job that's in the 10000 range and I want to get a bid bond, what's the cost of the bids... if I get the bid bond and then a performance bond does that money carry over or I lose it..... yes I have never done this be4 and don't have a clue...
