What is a Bid Bond in Maine?
A bid bond is a type of surety bond, which guarantees that the bidder will enter into the contract and complete it according to its terms. The bid bond provides assurance to the project owner that the bidder has the knowhow and wherewithal to finish the job once the bidder is selected after the bidding process. The basic reason is that you need one in order to get the work. But the larger question is why are more owners/developers requiring a surety bid bond? The basic answer is risk. Given the uncertainty of the marketplace, which includes long-time contractors going bankrupt, to municipalities filing bankruptcy (or just slow paying), has led to owners being afraid that their contractors will be unable to finish the job. Accordingly, 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 Maine?
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 P&P bond if you get the job. 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 ME?
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 Maine. 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 Maine?
We make it easy to get a contract bid bond. Just click here to get our Maine Bid Bond Application. Fill it out and then email it and the Maine bid specs/contract documents to [email protected] or fax to 855-433-4192.
You can also call us at 913-225-8501. We review each application for bid bonds and then submit it to the surety that we believe will provide the best bid bond for your job. We have a excellent success rate in getting our clients bid and P&P bonds at the very best rates possible.
What is a Maine 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 (5%) or ten (10%) 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 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 performance and payment 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 Maryland Bid Bond page here.
More on Bid Bonds https://swiftbonds.com/bid-bond/.
Step-By-Step Quick Suggestions When Thinking Of Bid Bonds
Surety Bid Bond is very important for anybody, but this is fairly complicated if you don’t know anything concerning this. This is not an insurance claim, but this is a kind of guarantee that the principal will perform the work correctly for the obliged.
You must understand that most folks will actually require you to obtain a certain bond before they think about your services since it will likely be a guarantee for them. Because they need this kind of thing from you, it is essential to search for an insurance company that could provide this to you.
If you truly want a license bond, permit bond, commercial bond and more, you must know a lot of things about Bid Bonds. Listed below are some of the important things that you have to know.
A Simple Explanation On A Surety Bid Bond
Bid Bonds will be required by the public as it can secure them and it may also guarantee that the principal will fulfill their duties. As the principal, you have to obtain a license Surety Bid Bond to guarantee that your company will adhere to the laws and you need a contract bond to be sure that a public construction project will be completed. There are examples which will offer an idea on Surety Bid Bond.
This is made for the clients since they will be protected by the bond, but it could also provide advantages to you as they will trust you in case you have this.
How Does It Work?
Bid Bonds are actually regarded as a three-party agreement among a surety company, the principal and the obliged. The principal is the employer, individual or company which will complete the work while the obliged is the project owner.
Construction businesses will usually be required by the law to buy Bid Bonds when they’re going for a public project. Once the government needs to do a public project, the winning contractor must secure several bonds.
The bond will ensure that the sub-contractors and the other workers will be paid even when the contractor defaults. The contractor would be responsible in covering the losses, but as soon as they reached the limit, the duty will fall to the surety company.The contractor will handle the losses, but once they actually reached the limit, the duty will obviously fall to the surety company.
Applying For A Surety Bid Bond
Insurance providers are the ones that are offering Bid Bonds, but there are also some surety companies that specialize in this type of service. Surety companies will invariably be licensed by a state Department of Insurance so make sure that you check first before you avail. It will not be simple to apply for a bond because the applications will have to go through checking before it’s approved. The bond underwriters will have to check the financial history of the applicants, credit profile and other important aspects.
It implies that there’s a chance that you will not be accepted for a Surety Bid Bond, specially if you have a bad credit score.
How Much Are You Going To Spend For This?
There’s no specific cost when it comes to a Surety Bid Bond because it will still depend upon various reasons such as the bond type, bond amount, where the bond will probably 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. It won’t be a problem for the amount of bond because you will get a $10,000 bond or a $25,000 bond. If you actually have a credit rating that is above or near 700, you will qualify for the standard bonding market and you must pay about 1 to 4 percent of the Surety Bid Bond amount. If you will get a $10,000 bond, it will only cost $100 to $400.
Is There A Chance Of Being Denied?
There’s a chance that the license and permit bond will be denied by the insurance organizations and it will depend upon the background check that they did. If they actually believe that you are a big risk to them, they will deny your application. Credit history will be a deciding factor as well because if you will have a bad credit rating, it’s going to be difficult to get a Surety Bid Bond because organizations will think of you as a risk. For those who have a bad credit rating, you can still be approved, but you must pay an interest rate of 10 to 20 percent.
You must understand that a Surety Bid Bond is extremely important for companies, specifically as soon as they are considering a government project. Bid Bonds will really be used for lots of things, but they have one thing in common – they always protect the obliged.