What is a Bid Bond in Hawaii?
A bid bond is one of the types of surety bonds, 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 expertise and ability to finish the job once you are selected after winning the bid. The simple reason is that you need one in order to get the contract. But the larger question is why are more owners/developers requiring a bid bond in the first place? The answer is risk. Given the uncertainty of the marketplace, which includes long-time contractors closing their doors, to municipalities filing bankruptcy (or just slow paying), has led to owners being afraid that their contractors will be unable complete the job. So, 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 (5%) or ten (10%) percent, is forfeited if you don’t accept the job).
How much does a Bid Bond Cost in Hawaii?
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 contract bond if you get the job. The cost of a bid 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 HI?
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 Hawaii. 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 Hawaii?
We make it easy to get a contract bid bond. Just click here to get our Hawaii Bid Bond Application. Fill it out and then email it and the Hawaii 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 all application for surety bonds and then submit it to the surety that we believe will provide the best surety bond for your company. We have a high success rate in getting our clients bid and P&P bonds at the very best rates possible.
What is a Hawaii 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 penalty 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 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 security risk for the benefit of the owner.
Who Gets the Bond?
The general contractor is the entity 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 bid bond is written by the surety. This is also known as bonding a business.
We provide bid bonds in each of the following counties:
See our Idaho Bid Bond page here.
More on Surety Bid Bonds https://swiftbonds.com/bid-bond/.
Essential Requirements To Know For Bid Bonds
Bid Bonds are a complicated financial product to know, specifically if you do not have any experience with them. Most folks think of this as a type of insurance, but it's really a guarantee that the principal will perform their work effectively. Insurance providers can provide a Surety Bid Bond, but this isn't insurance because its function is quite different. Most individuals would expect you to get a Bid Bond before they think about your services because it is a type of guarantee to them.
If you wish to consider obtaining a bid bond and more, you must know how they work. We are going to provide some info on the significance of Bid Bonds and how they work.
What Is A Surety Bid Bond?
Bid Bonds are developed to protect the public since they're a kind of guarantee that the obligation will be satisfied. You are going to have to get a bid bond to guarantee the consumers that your company will adhere to the laws and you must obtain a contract to guarantee that a public construction project will be completed.
These are the examples that are frequently used to explain what Bid Bonds are and how they work. It can also offer some benefits to you since the clients would place their trust in you in case you are protected by bond.
There are literally thousands of bonds right now and the kind of bond that you actually need will always depend on your situation.
The Work Of A Surety Bid Bond
Bid Bonds are a three-party agreement between the principal, the obliged and the surety company. The obliged is the project owner while the principal is the employer or company that would carry out the work. Construction companies are usually asked by the law to acquire Bid Bonds when they are hired for a public project. The government would require a construction company to secure a host of bonds before they work on a particular project. The bond will guarantee that the sub-contractors and the other workers will be paid even if the contractor will default. The contractor will be covering the losses, but when they reach their limit, the duty will fall to the surety company.
How To Apply For A Surety Bid Bond
Bid Bonds are given by insurance providers, but you could have some standalone surety companies that specialize in these products. Surety companies are licensed by a state Department of Insurance.
It's tough to apply for a bond because the candidates will experience a process that's similar to applying a loan. The bond underwriters will evaluate the financial history of a candidate, credit profile, managerial team and other key factors.
There is a chance that you will not be approved for a Surety Bid Bond, specifically once the bond underwriters see something from your credit history.
The Price Of A Surety Bid Bond
There isn't any set cost for a bid bond as it depends on numerous reasons like bond type, bond amount, where the bond will likely be issued, contractual risk, the credit score of the applicant and a lot more.
There are thousands of bonds available right now and the cost will depend on the kind of bond that you want to obtain. The amount of bond that you will get may also be an issue because you could get a $10,000 bond or a $25,000 bond.
If you have a credit history of above or near 700, you will qualify for the standard bonding market and you'll only pay a premium that's 1 to 4 percent of the Surety Bid Bond amount. If you will get a $10,000, it would cost around $100 to $400.
Is There A Chance Of Being Denied?
There is a chance that your bid bond will be denied by the insurance organizations and it would depend upon the background check that they did. If they think that it will be a big risk to offer a Surety Bid Bond, they will deny your application. Credit history will also be a deciding factor because if you have a bad credit rating, it will be hard for you to get a bid bond because businesses are considering you as a risk. For those who have a bad credit rating, you could still be approved, but you will have to pay an interest rate of 10 to 20 percent.
You must know that a Surety Bid Bond is very important for businesses, specifically if they will consider a government project. Bid Bonds can be used for many things, but they all have one thing in common: they are all made to protect the obliged.