What is a Bid Bond in Alabama?
A bid bond is a type of surety bond, which guarantees that the bidder will enter into the agreement and complete the contract according to its terms. It provides assurance to the project owner that the bidder has the ability and ability to complete the job once you are selected after winning the bidding process. The basic reason is that you need one in order to get the work. But the bigger question is why are more owners/developers requiring a bid bond? The answer is risk. Given the uncertainty of the marketplace, which includes long-time contractors closing shop, to municipalities filing bankruptcy (or just slow paying), has led to owners being afraid that their contractors will be unable finish the work. Thus, they require a some protection.
Just fill out our bond application here and email it to firstname.lastname@example.org - click here to get our Alabama Bid Bond Application
A bid bond is issued as part of a bid by a surety bond company to the project owner. The owner is then assures that the winning bidder will take on the contract under the terms at which they bid.
Most bid bonds contain a bid percentage (usually 5% or 10%, is forfeited if you don’t accept the job).
How much does a Bid Bond Cost in Alabama?
Swiftbonds does not charge for a surety bid bond (with two exceptions, see below). The reason that we don't charge for a bid bond is that we will charge for the P&P bond if you get the job. The cost of a performance bond can vary widely depending on the amount of coverage that is required (see below).
Two exceptions for bid bond charges:
1) We do charge for Overnight fees
2) We will charge you if there is NOT going to be a performance bond.
How much do bonds cost in AL?
Bond prices fluctuate based on the job size (that is, it's based on the cost of the underlying contract). The cost of a bond is estimated through a couple of back-of-the-envelope calculations. In general, the cost is approximately three percent (3%) for jobs under $800,000 and then the percentage is lower as the contract amount increases. We work diligently to find the lowest premiums possible in the state of Alabama. Please call us today at (913) 225-8501. We'll find you the very best rate possible for your maintenance bond or completion bond. Things that can affect this pricing are the perceived risk of the job, the financial position of the entity being bonded, plus other factors.
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These rates are for Merit clients, Standard rates are higher
How do I get a Bid Bond in Alabama?
We make it easy to get a contract bid bond. Just click here to get our Alabama Bid Bond Application. Fill it out and then email it and the Alabama bid specs/contract documents to email@example.com or fax to 855-433-4192.
You can also call us at 913-225-8501. We fully review each application for bid bonds and then submit it to the surety that we believe will provide the best surety bond for your company. We have a very high success rate in getting our clients surety bonds at the very best rates possible.
What is a Alabama Bid Bond?
A bid bond is a bond that assures that you will accept the work if you win the contract. The bid fee (usually five (5%) or ten (10%) percent) is a damages calculation that is paid when you win the bid, but then refuse the work.
Find a Bid Bond near Me
Typically, a bid bond and performance/payment bond are done together in the same contract by the surety. This way, the owner of the project is assured that the project can be completed pursuant to the terms of the contract and that it will not be liened by any contractor. The bond is performance security for the benefit of the owner.
Who Gets the Bond?
The general contractor is the corporation that gets the bond. It is for the benefit of the owner (or in the case of government contract work, the governmental entity). However, it's the general contractor that has to apply for the bond and be underwritten before the performance and payment bond is written by the surety. This is also known as bonding a business.
We provide performance and payment bonds in each of the following counties:
St. Clair County
See our Alaska bid bond page here.
More on Surety Bid Bonds https://swiftbonds.com/bid-bond/.
Practical Advice When Thinking Of Bid Bonds
It's correct that Bid Bonds are very complicated, especially if you don't have any idea how this works. Most individuals think of this as a kind of insurance, but it is only a type of guarantee that the principal will perform their work correctly. Insurance providers usually provide a Surety Bid Bond, but you can't call it insurance because its function is different. Most people would expect you to get a Surety Bid Bond before they consider your services as it is a kind of guarantee to them.
If you would like to obtain a license bond, permit bond, commercial bond and more, you have to know how they really work. We'll provide some info on the importance of Bid Bonds and how they work.
What Is A Surety Bid Bond?
Bid Bonds are actually developed to secure the public because they are a form of guarantee that the obligation will likely be satisfied. You'll need to obtain a license Surety Bid Bond to guarantee the clients that your company will abide by the laws and you must get a contract to guarantee that a public construction project will likely be completed.
These are just a few of the examples that are often used to explain Bid Bonds and how they work. It would benefit you in a way that the clients will trust you if you have a company because they are protected by the bond.
There are literally thousands of bonds right now and the type of bond that you actually need will usually depend upon your circumstance.
How Does It Work?
Bid Bonds could be regarded as a three-party agreement between a surety company, the principal and the obliged. The principal is actually referred to as the employer or company that may complete the work and the obliged is the project owner. Construction businesses are usually asked to purchase Bid Bonds if they are considering a public project. The government may also require the construction company to secure a host of bonds if they really want to go with the project.
The primary function of the bond is actually for the subcontractors and employees to make certain that they will be paid even when the contractor defaults. The contractor will likely be addressing the losses, but as soon as they reached the limit, the duty will truly fall to the surety company.
The Application For A Surety Bid Bond
Bid Bonds are actually offered by insurance companies, but you may always look for standalone surety companies that will concentrate on these products. It will not be simple to apply for a bond since the applicant will need to experience a rigid process that is comparable to applying for a loan. The bond underwriters will evaluate the financial history of the applicant, their credit profile and other important aspects to make sure that they should be approved. It signifies that there is a chance that you will be denied for a Surety Bid Bond, especially when the underwriters found something bad on the credit history.
The Price Of A Surety Bid Bond
There's no specific cost for a Surety Bid Bond because it will depend on a number of reasons like the bond type, bond amount, where the bond will be issued, contractual risk, the credit history of the applicant and many more.
There are thousands of bonds available right now and the cost will depend on the kind of bond that you want to get. The amount of bond that you will get can also be an issue because you could get a $10,000 bond or a $25,000 bond.
If you have a credit score of above or near 700, you are going to qualify for the standard bonding market and you are going to only pay a premium that's 1 to 4 percent of the Surety Bid Bond amount. If you are going to actually obtain a $10,000 bond, it will obviously cost around $100 to $400.
Is There A Chance Of Being Denied?
There's a chance that the license and permit bond will probably be denied by the insurance organizations and it would depend on the background check that they did. If they think that it would be a big risk to offer a Surety Bid Bond, they will deny your application. Credit rating may also be a deciding factor because if you actually have a bad credit rating, it will be hard for you to get a Surety Bid Bond because companies are considering you as a risk. For those who have a bad credit history, you will still be approved, but you should pay an interest rate of 10 to 20 percent.
If you are going to acquire your Surety Bid Bond, make sure that you understand the whole process so you won't make a mistake. It will not be easy to apply, but if your requirements are complete and you are eligible, you could obtain a Surety Bid Bond.