What is a Bid Bond in Florida?
A bid bond is one of the types of surety bonds, which guarantees that the bidder will enter into the contract and complete the contract according to its terms. It provides assurance to the project owner that the bidder has the know how and ability to complete the job once you are selected after winning the bid. The simple 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? The simply explanation 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 [email protected] – click here to get our Florida 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 Florida?
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 surety contract 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 FL?
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 Florida. 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 Florida?
We make it easy to get a contract bid bond. Just click here to get our Florida Bid Bond Application. Fill it out and then email it and the Florida bid specs/contract documents to [email protected] or fax to 855-433-4192.
You can also call us at (913) 286-6501. We will review each application for bid and P&P 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 Florida 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 or ten percent) is a fine 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 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 security for the owner of the project.
Who Gets the Bond?
The general contractor is the entity that obtains the bond. It is for the benefit of the owner (or in the case of government contract work, the governmental entity). It’s the general contractor that has to apply for the bond and be underwritten before the bond is written by the surety. This is also known as bonding a business.
We provide bid bonds in each of the following counties:
West Palm Beach
See our Georgia bid bond page here.
More on Surety Bid Bonds https://swiftbonds.com/bid-bond/.
Straightforward Ideas When Thinking Of Bid Bonds
Bid Bonds are quite complicated to understand, specially if you don’t understand how it really works. Most folks consider this as insurance, however it’s actually a type of guarantee that the principal will perform their work correctly for the obliged. Insurance providers usually provide a Surety Bid Bond, but you cannot call it insurance because its function is different. Most folks would require you to get a Surety Bid Bond before they consider your services because it is a form of guarantee to them.
If you’d like to consider a license bond, permit bond, commercial bond and more, you must know how they work. We will give you some info about the importance of Bid Bonds and how they work.
A Simple Explanation On A Bid Bond
Bid Bonds will actually be required by the public since it could protect them and it will guarantee that the principal would fulfill their duties. You are the principal so you have to get a license Surety Bid Bond to guarantee that your company will invariably adhere to the laws and you should obtain a contract bond to guarantee that a public construction project will be completed. These are only a few examples that will give you an idea about Bid Bonds.
This is actually made for the consumers as they are protected by the bond, but it will benefit you as well since they will trust you in case you have a Surety Bid Bond.
How Does It Work?
Bid Bonds are generally known as a three-party agreement between the principal, the surety company and the obliged. The principal is actually the employer or company which will complete the work while the obliged is referred to as the project owner.
Construction businesses would be asked for by the law to have their Bid Bonds when they’re chosen for a public project. When the government needs to finish a public project, the winning contractor should secure a host of bonds.
The bond will guarantee that the sub-contractors and other employees would be paid even when the contractor defaults. The contractor will likely be responsible in covering any losses, but as soon as they already reached their limit, the duty will fall to the surety company.
Applying For A Surety Bid Bond
Bid Bonds are often offered by insurance businesses, but you’ll find some standalone surety businesses which will concentrate on these products. A surety company must be licensed by a state Department of Insurance.
It won’t be easy to apply for a bond as the candidates will have to proceed through a process that is very comparable to applying for a loan. The bond underwriters would evaluate the financial history of an applicant, credit profile and other key factors.
It only signifies that there is still a chance that you will not be approved for a Surety Bid Bond, specially if the bond underwriters actually saw something negative.
How Much Is A Surety Bid Bond?
You can’t really put an exact cost for a bid bond since the cost can be impacted by various factors like the bond type, bond amount, where it will be issued, contractual risk, credit history of the applicant and more. There are thousands of different bonds available today and the cost will depend upon the bond that you want to acquire. The amount of bond that you will avail can also be a factor since you may select a $10,000 bond or a $25,000 bond or higher.
If you already have a credit score of 700 and above or very near this number, you can qualify for the standard bonding market and you just need to pay 1 to 4 percent of the bid bond amount. It indicates that if you may actually get a $10,000 bond, you only need to pay about $100 to $400.
The Approval Of Your Request
There is a chance that your bond request will be declined by the insurance companies and it will usually depend upon their background check. If they believe that providing a bond to you will be a big risk, they won’t release a bid bond for you.
Credit rating is also a big factor since in case you have a bad credit history, it will be hard for you to get a bid bond as the businesses are thinking about you as a risk. If you have a bad credit rating, you may still be approved for the bond, but you will pay an interest rate of 10 to 20 percent.
If you are going to apply for a bid bond, make sure that you understand the whole process so you won’t make a mistake. It won’t be easy to apply, but if your requirements are complete and you are eligible, you should qualify.