What Is a Bid Bond?
The Bid Bond protects the owner or developer in a construction project by providing financial guarantees if the winning bidder defaults. It is meant as a form of insurance to safeguard risks that come along with bidding on contracts. An unsuccessful bidder may have limited unencumbered assets worth less than $500,000.00 that would prevent it from performing its obligations under the agreement, resulting in increased cost for the general contractor and costly disruptions to completion, and substantial delay of project schedule.
Bid Bonds incorporates both public and private construction projects. If you’ve never heard of them before now, don’t worry, you’re not alone! But understanding these bonds is essential to stay informed about potential risks associated with your business.
Bid bonds are a common requirement on projects that also involve performance bids and payment bonds.
How Does a Bid Bond Work?
Bid bonds protect against loss of revenue if a contractor defaults and prevents awarding bodies from paying twice for the same project.
A bid bond company can provide you with coverage and processes your application on your behalf. It can be obtaining a bond for the amount of work, issuing it in your name as provided by law, and promise they will undertake all legal action necessary when a contractor defaults.
A contractor can default by not completing the work contracted or failing to meet contract conditions.
Bid Bond Requirements in Texas
Getting a surety bond is very important if you want your company to become competitive in Texas’ construction industry. Most importantly, almost all project owners and developers require a bond from you before you can bid on their projects.
Security Bidding: Secure Your Bid Bonds at the Best Rate
Protect yourself and your client with bid bonds from Northwest Insurance Agency.
With bid bonds, you can rest easy knowing that your money is protected should anything happen to it while working for someone else’s project. You’ll have peace of mind knowing that no matter what happens, we’re here for you.