What is a Bid Bond in Arizona?
A bid bond is a type of surety bond, that guarantees that the bidder will accept the project and complete the contract according to its terms. The bid bond provides assurance to the project owner that the bidder has the expertise and wherewithal to finish the job once the bidder is selected after winning the bidding process. The basic reason is that you need one in order to get the work. However, the larger question is why are more owners/developers requiring a bid bond? The simply explanation is risk. Given the uncertainty of the marketplace, which includes experienced contractors closing their doors, to municipalities filing bankruptcy (or just slow paying), has led to owners being afraid that their contractors will be unable to complete the job. Thus, they require a some protection.
Just fill out our bond application here and email it to [email protected] - click here to get our Arizona 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 five or ten percent, is forfeited if you don’t accept the job).
How much does a Bid Bond Cost in Arizona?
Swiftbonds does not charge for a 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 performance bond.
How much do bonds cost in AZ?
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 Arizona. 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 Arizona?
We make it easy to get a contract bid bond. Just click here to get our Arizona Bid Bond Application. Fill it out and then email it and the Arizona bid specs/contract documents to [email protected] or fax to 855-433-4192.
You can also call us at 913-225-8501. We thoroughly review each application for bid and performance bonds and then submit it to the surety that we believe will provide the best surety bid bond for your company. We have a very high success rate in getting our clients bid and P&P bonds at the best rates possible.
What is a Arizona 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 refuse the work.
Find a Bid Bond near Me
Typically, a bid bond and P&P 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. This is performance security for the owner of the project.
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:
See our Arkansas performance bond page here.
More on Bid Bonds https://swiftbonds.com/bid-bond/.
Understanding Various Guidelines And Advice When Looking At Bid Bonds
You have to understand that a Surety Bid Bond is really important for anyone, however it is complex if you do not know anything about this. This is not regarded as an insurance claim because it's a type of assurance that the principal will perform their job adequately. You have to understand that some folks will require you to obtain a certain bond before they actually go for your services as it will probably be a type of assurance to them. They require this type of thing from you so you should look for an insurance company that may offer this to you. If you really want to look at a license bond, permit bond, commercial bond and more, you have to understand what it means.
The Importance Of A Surety Bid Bond
Bid Bonds will almost always be in demand to protect the public as it is a form of guarantee that your obligations and duties will probably be complete. You will have to obtain a license Surety Bid Bond to make certain that the company will always follow the laws and you may obtain a contract bond to make sure that the public project will be completed. A Surety Bid Bond is certainly meant for the obliged since they are the ones which are being protected, but it may also benefit you as the clients will trust you in case you have this. There are a lot of bonds today and the kind of bond that you would like to look for will depend upon the specific situation.
How Does It Work
Bid Bonds can be regarded as a three-party agreement between a surety company, the principal and the obliged. The principal is actually the employer or company which will provide the services and the obliged is the project owner. If a construction company will work on a public project, they will likely be needed to get Bid Bonds. The government may also require the construction company to secure several bonds once they really want to go with the project.
The main function of the bond is actually for the sub-contractors and employees to make sure that they will likely be paid even when the contractor defaults. The contractor will handle any losses, but as soon as they reached their limit, the duty will fall to the surety company.
How Do You Apply For A Surety Bid Bond?
Bid Bonds are generally provided by insurance businesses, but you will have some standalone surety companies that will concentrate on these products. Surety businesses are licensed by a state Department of Insurance.
It will not be easy to apply for a bond because the applicants will have to proceed through a process that's very comparable to applying for a loan. The bond underwriters would review the financial history of a candidate, credit profile and other important aspects.
It implies that there's a chance that you will not be accepted for a Surety Bid Bond, specifically if the bond underwriters saw something from your credit history.
How Much Are You Going To Spend For This?
There is no fixed when you are thinking about a Surety Bid Bond as it can still depend on various reasons like the bond type, bond amount, where the bond will be issued, contractual risk, credit score of the applicant and more. There are a lot of bonds available today and the cost will still depend upon the type that you will get. The amount of bond will probably be an issue because you can always get a $10,000 bond or a $25,000 bond. If you actually have a credit score that is above or near 700, you will qualify for the standard bonding market and you have to pay about 1 to 4 percent of the Surety Bid Bond amount. If you may get $10,000 bond, it will only cost $100 to $400.
Is There A Chance Of Being Denied?
There is a possibility that your license and permit bond will be denied by the insurance businesses and it will always depend upon the background check that they did. If they think that it will be a big risk to provide 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 history, it's going to be hard for you to obtain a Surety Bid Bond because businesses are considering you as a risk. For those who have a bad credit score, you may still be approved, but you must pay an interest rate of 10 to 20 percent.
If you wish to get your Surety Bid Bond, you must be sure that you understand the process so you will not make a mistake. It will not be simple to apply, but if the requirements are met and you are eligible, you will get a Surety Bid Bond.