What is a Bid Bond in Colorado?
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. It provides assurance to the project owner that the bidder has the knowhow and wherewithal to complete the job once the bidder is selected after winning the bid. The simple reason is that you need one to get the job. But the bigger 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 going out of business, to municipalities filing bankruptcy (or just slow paying), has led to owners being afraid that their contractors will be unable finish the work. Accordingly, they require a some protection.
Just fill out our bond application here and email it to [email protected] - click here to get our Colorado 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 (5%) or ten (10%) percent, is forfeited if you don’t accept the job).
How much does a Bid Bond Cost in Colorado?
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 get the job. The cost of a 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.
How much do bonds cost in CO?
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 Colorado. 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 Colorado?
We make it easy to get a contract bid bond. Just click here to get our Colorado Bid Bond Application. Fill it out and then email it and the Colorado bid specs/contract documents to [email protected] or fax to 855-433-4192.
You can also call us at (913) 286-6501. We fully review each application for bid bonds and then submit it to the surety that we believe will provide the best bid bond for your company. We have a great success rate in getting our clients bid bonds at the best rates possible.
What is a Colorado Bid Bond?
A bid bond is a bond that guarantees 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 back out of doing 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. The bond is security risk insurance for the benefit of the owner.
Who Gets the Bond?
The general contractor is the company 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 contract bond is written by the surety. This is also known as bonding a business.
See our Connecticut bid bond page here.
More on Surety Bid Bonds https://swiftbonds.com/bid-bond/.
Key Specifics When Thinking Of Bid Bonds
It is not incorrect to say that Bid Bonds are very complicated, specially if you don't have any idea how this works. Most individuals are thinking about this as an insurance, but this is a type of guarantee that the principal will perform their work correctly. Insurance providers usually provide a Surety Bid Bond, but you cannot call it insurance because its function is different. Most folks will surely require you to get a Surety Bid Bond before they consider your services as it's a kind of guarantee to them.
If you want to get a license bond, permit bond, commercial bond and more, you have to know how they work. We are going to provide some good info on the significance of Bid Bonds and how they work.
A Basic Explanation On Bid Bonds
Bid Bonds will invariably be asked for by the public because it will secure them and it will guarantee that the principal will fulfill their responsibilities. You are the principal so you have to obtain a license Surety Bid Bond to guarantee that your company will invariably adhere to the laws and you must get a contract bond to guarantee that a public construction project will be completed. There are examples which will provide an idea on Surety Bid Bond.
This is made for the clients since they will likely be protected by the bond, but it can also provide advantages to you since they will trust you in case you have this.
How It Works
Bid Bonds are considered as a three-party agreement between a surety company, the obliged and the principal. The principal is actually the employer or company that will offer the services and the obliged is the project owner. Construction companies will invariably be required to purchase Bid Bonds as soon as they will work on a public project. If they want to work on the project, the government will need the construction company to secure a number of bonds.
The work of the bonds is aimed at the subcontractors and workers to guarantee that they will likely be paid even if the contractor defaults. The contractor will likely be covering the losses, but as soon as they reached the limit, the duty will definitely fall to the surety company.
How Do You Apply For A Surety Bid Bond?
Bid Bonds are generally given by insurance businesses, but you could look for some standalone surety businesses that focus on these unique products. A surety company should be licensed by a state Department of Insurance.
It's hard to apply for a bond because the applicants will definitely experience a procedure that's comparable to applying for a loan. The bond underwriters will evaluate the financial history of an applicant, credit profile, managerial team and other key factors.
There's a chance that you will not be accepted for a Surety Bid Bond, particularly when the bond underwriters saw something from your credit history.
How Much Is A Surety Bid Bond?
It is hard to quote an exact cost for a bid bond because the cost might be affected by numerous factors like the bond type, bond amount, where it will likely be issued, contractual risk, credit history of the applicant and more. There are thousands of different bonds available right now and the cost will always depend on the bond that you could get. The amount of bound that you may avail may also be a big factor because you can select a $10,000 bond or a $25,000 bond or higher.
If you already have a credit history of 700 and above or very near this number, you could qualify for the standard bonding market and you only need to pay 1 to 4 percent of the Surety Bid Bond amount. This implies that if you may get a $10,000 bond, you only need to pay $100 to $400 for the interest.
The Approval Of Your Request
There is a chance that your bond request will be declined by the insurance businesses and it will depend on the background check that they carried out. If they believe that issuing you a bond will be a big risk, they won't release a Surety Bid Bond for you.
Credit score is also an issue because if you have a bad credit rating, it will likely be extremely tough for you to get bonded as the companies consider you as a risk. If you have a poor credit score, you could be approved for the bond, but you must pay an interest rate of 10 to 20 percent.
There is a chance that your application would be declined so you must check the requirements before applying.
If you're going to get a Surety Bid Bond, make sure that you know what is entailed before deciding. It won't be easy to apply for one, but if you actually understand more about this, it will be easier to be approved.