What is a Bid Bond in Alaska?
A bid bond is a type of surety bond, which guarantees that the bidder will accept the contract and complete the contract according to its terms. It provides assurance to the project owner that the bidder has the knowhow and ability to complete the job once you are selected after winning the bidding process. The basic reason is that you need one so that you get the contract. However, the bigger question is why are more owners/developers requiring a bid bond in the first place? The basic answer is risk. Given the uncertainty of the marketplace, which includes long-time contractors going bankrupt, to municipalities filing bankruptcy (or just slow paying), has led to owners being afraid that their contractors will be unable to finish the work. Accordingly, they require a some protection.
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 five or ten percent, is forfeited if you don’t accept the job).
How much does a Bid Bond Cost in Alaska?
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 win the contract. The cost of a P&P 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 bond on the contract (rare).
How much do bonds cost in AK?
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 Alaska. Please call us today at (913) 286-6501. 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 Alaska?
We make it easy to get a contract bid bond. Just click here to get our Alaska Bid Bond Application. Fill it out and then email it and the Alaska bid specs/contract documents to [email protected] or fax to 855-433-4192.
You can also call us at (913) 286-6501. We review all application for bid and P&P bonds and then submit it to the surety that we believe will provide the best bid and P&P bond for your contract. We have a high success rate in getting our clients surety bonds at the very best rates possible.
What is a Alaska 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 or ten percent) is a forfeiture that is paid when you win the bid, but then decide not to take the work.
Find a Bid Bond near Me
Typically, a bid bond and payment and performance 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 security for the benefit of the owner.
Who Gets the Bond?
The general contractor is the corporation that obtains 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 contract bond is written by the surety. This is also known as bonding a business.
We provide bid bonds in each of the following counties:
Fairbanks North Star
Lake And Peninsula
Prince of Wales-Outer Ketchikan
See our Arizona bid bond page here.
More on Surety Bid Bonds https://swiftbonds.com/bid-bond/.
Clear-Cut Recommendations When Looking At Bid Bonds Resolved
You have to know that a Surety Bid Bond is really important for anybody, but it is complex if you do not know anything relating to this. This is not a kind of insurance claim since this is a type of assurance that the principal will do the work adequately for the obliged. You have to understand that some people will need you to obtain a specific bond before they actually opt for your services since it will probably be a type of guarantee to them. Since they need this type of thing from you, it will be important to search for an insurance company which could provide this to you. If you genuinely wish to consider a license bond, permit bond, commercial bond and more, you have to know what it means.
A Basic Explanation On Bid Bonds
Bid Bonds will actually be required by the public since it could protect them and it'll guarantee that the principal would fulfill their duties. You are the principal so you have to obtain a license Surety Bid Bond to guarantee that your company will invariably abide by the laws and you should get a contract bond to guarantee that a public construction project will likely be completed. These are just a few examples which will give you an idea about Bid Bonds.
This is actually made for the clients since they are protected by the bond, but it would benefit you as well because they will trust you in case you have a Surety Bid Bond.
How Does It Work
Bid Bonds are considered as a three-party agreement between a surety company, the obliged and the principal. The principal is generally known as the employer or company that will complete the work and the obliged is the project owner. Construction companies will usually be needed to purchase Bid Bonds if they will work on a public project. Once they want to work on the project, the government will need the construction company to secure several bonds.
The work of the bonds is for the subcontractors and workers to be sure that they will be paid even when the contractor will default. The contractor will likely be covering the losses, but once they reached the limit, the duty will obviously fall to the surety company.
Applying For A Surety Bid Bond
Insurance businesses usually offer Bid Bonds, but there are standalone surety businesses that usually concentrate on these unique products. Surety businesses will always be licensed by a state Department of Insurance so just be sure you check first before you avail. It will not be simple to apply for a bond because the applications will need to go through a background checking procedure. The bond underwriters will need to look into the financial history of the applicants, credit profile and other key factors.
It only signifies that there is always a chance that you are going to not be accepted for a Surety Bid Bond, especially if your credit rating is bad.
How Much Is A Surety Bid Bond?
You cannot really find an exact price for a Surety Bid Bond because its cost is always impacted by numerous factors like bond type, bond amount, where it will be issued, contractual risk, credit score of the applicant and more. There are actually thousands of different bonds available right now and the cost will really depend on the bond that you'll get. The amount of bond that you are going to avail can also be an issue since you may select a $10,000 bond or a $25,000 bond or higher.
If you already have a credit rating of 700 and above or very near this number, you could be eligible for the standard bonding market and you only have to pay 1 to 4 percent of the Surety Bid Bond amount. It only signifies that if you'll get a $10,000 bond, you only have to pay $100 to $400.
Your Application Might Be Refused
There is a big chance that your license and permit bond request will likely be denied by the surety company because it will invariably depend on the results that they will get from the background check. If the surety company thinks that it will likely be a risk to give you a Surety Bid Bond, they will really deny your application. You credit history will really be an important factor if you want to be accepted for a Surety Bid Bond because if your credit rating is bad, it will likely be hard to be accepted.
If you will get a Surety Bid Bond even if your credit rating is bad, you'll pay an interest rate of 10 to 20 percent.
If you intend to get a Surety Bid Bond, make sure that you know what it may provide before deciding. It's difficult to apply for it, but if you understand more concerning this, it will likely be a little easier to be accepted.