What is a Bid Bond in Iowa?
A bid bond is a type of surety bond, that guarantees that the bidder will take the job and complete it according to its terms. It provides assurance to the project owner that the bidder has the knowhow and ability to finish the job once the bidder is selected after winning the bidding process. The simple reason is that you need one to get the work. But the larger question is why are more owners/developers requiring a surety bid bond? The answer is risk. Given the uncertainty of the marketplace, which includes long-term contractors closing shop, to municipalities filing bankruptcy (or just slow paying), has led to owners being afraid that their contractors will be unable to finish the work. 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 5% or 10%, is forfeited if you don’t accept the job).
How much does a Bid Bond Cost in Iowa?
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 performance bond if you win the contract. The cost of a performance 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 IA?
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 Iowa. 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 Iowa?
We make it easy to get a contract bid bond. Just click here to get our Iowa Bid Bond Application. Fill it out and then email it and the Iowa 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 surety bonds and then submit it to the surety that we believe will provide the best surety bond for your contract. We have a great success rate in getting our clients bid and P&P bonds at the very best rates possible.
What is a Iowa 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 5% or 10%) 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 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 performance 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). 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 Kansas Bid Bond page here.
More on Surety Bid Bonds https://swiftbonds.com/bid-bond/.
News On How To Locate Bid Bonds
You should know that a Surety Bid Bond is really important for anybody, but it is complicated if you do not know anything concerning this. This isn't a type of insurance claim as this is a form of assurance that the principal will do the work adequately for the obliged. You have to know that some folks expect you to get a bond before they will consider your services as it could be regarded as a form of assurance to them. They actually need this type of thing from you so you have to search for an insurance company which will offer this. If you wish to think about a license bond, permit bond, commercial bond and more, you need to understand what it means.
An Explanation On Bid Bonds
Bid Bonds will always be required by the public as it will protect them and it'll guarantee that the principal will fulfill their obligations. You are the principal so you have to get a license Surety Bid Bond to guarantee that your company will usually adhere to the laws and you should obtain a contract bond to guarantee that a public construction project will likely be finished. These are some examples which will give you an idea about a Surety Bid Bond.
This is made for the customers as they will be protected by the bond, but it may also offer advantages to you because they will trust you in case you have this.
How Does It Work?
Bid Bonds are actually considered as a three-party agreement among a surety company, the principal and the obliged. The principal is the employer or company that will perform the work while the obliged is the project owner.
Construction companies will invariably be required by the law to purchase Bid Bonds when they are taking a public project. Once the government demands a construction company to do something, the winning contractor should obtain a host of bonds.
The bond will guarantee that the subcontractors and the other workers will be paid even if the contractor defaults. The contractor will be accountable in addressing any losses, but once they already reached their limit, the duty will fall to the surety company.
Applying For A Surety Bid Bond
Insurance companies typically provide Bid Bonds, but there are some standalone surety companies that specialize in these products. Surety businesses will obviously be licensed by a state Department of Insurance so you should check it first before you avail. It will not be easy to apply for a bond since the applications will need to proceed through a background checking procedure. The bond underwriters will review the financial history of the candidates, credit profile and other important aspects.
It implies that there's a chance that you will not be approved for a Surety Bid Bond, specifically in case you have a bad credit rating.
How Much Are You Going To Spend For This?
There is no fixed cost when you're speaking about a Surety Bid Bond since it will still depend on different reasons like the bond type, bond amount, where the bond will be issued, contractual risk, credit rating of the applicant and more. There are literally thousands of bonds available today and the cost will always depend on the type that you will get. It won't be a problem for the amount of bond because you will obtain a $10,000 bond or a $25,000 bond. For those who have a credit history that is above or near 700, you could qualify for the standard bonding market and you simply have to pay about 1 to 4 percent of the Surety Bid Bond amount. If you could get $10,000 bond, it will only cost $100 to $400.
Is There A Chance To Be Refused?
There's a chance that your license and permit bond request will be denied by the insurance providers and it'll depend upon their background check. If they actually feel that giving you a bond will likely be a big risk, they will not release a Surety Bid Bond for you.
Credit history is also an issue because if you have a bad credit history, it would be very hard for you to obtain a Surety Bid Bond as the companies consider you as a risk. If you have a bad credit score, you could still be accepted for the bond, but you will pay an interest rate of 10 to 20 percent.
There is a possibility that your application will be declined so you have to look at the requirements before you apply.
If you're going to get a Surety Bid Bond, make certain you know what it can offer before you decide. It won't be a simple task to be accepted for this, but if you recognize how it works, you are going to also know in case you are qualified or not.