What is a Bid Bond in Massachusetts?
A bid bond is one of the types of surety bonds, which guarantees that the bidder will accept the contract and complete the agreement according to its terms. It provides assurance to the project owner that the bidder has the ability and ability to finish the job once you are selected after winning the bidding process. The simple reason is that you need one so that you get the job. However, the bigger question is why are more owners/developers requiring a bid bond? The answer 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 to complete the job. Accordingly, they require a some protection.
Just fill out our bond application here and email it to [email protected] – click here to get our Massachusetts 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 or ten percent, is forfeited if you don’t accept the job).
How much does a Bid Bond Cost in Massachusetts?
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 performance bond if you get the job. The cost of a P&P 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 MA?
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 Massachusetts. 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 Massachusetts?
We make it easy to get a contract bid bond. Just click here to get our Massachusetts Bid Bond Application. Fill it out and then email it and the Massachusetts bid specs/contract documents to [email protected] or fax to 855-433-4192.
You can also call us at 913-225-8501. We fully review each and every application for surety bonds and then submit it to the surety that we believe will provide the best bid and P&P bond for your company. We have a great success rate in getting our clients bid and P&P bonds at the very best rates possible.
What is a Massachusetts 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 penalty 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 payment and performance 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 Bid 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). 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 Michigan Bid Bond page here.
More on Surety Bid Bonds https://swiftbonds.com/bid-bond/.
Comparing The Best Methods For Finding Bid Bonds
You need to understand that a Surety Bid Bond is extremely important for anyone, but this is complicated if you don’t know anything about it. This is not an insurance claim because this is a type of guarantee that the principal will effectively complete the task. You have to understand that some individuals will require you to get a certain bond before they actually opt for your services because it will be a type of guarantee to them. They actually need this type of thing from you so you must search for an insurance company that can provide this. If you want to think about a license bond, permit bond, commercial bond and more, you have to understand what it means.
The Importance Of A Surety Bid Bond
Bid Bonds will almost always be in demand because they often protect the public. This is a type of assurance that the obligations and duties will be finished. You have to obtain a license Surety Bid Bond to make certain that your company will follow the laws and you generally get a contract bond to guarantee that a public project will probably be completed. A Surety Bid Bond is meant for the obliged because they are actually the ones that need protection, but it can also benefit you as the clients will trust you for those who have this. There are a lot of bonds today and the kind of bond that you want to consider will depend on the specific situation.
The Primary 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 in fact the employer or company that would perform the work. Construction companies will almost always be required by the law to get Bid Bonds when they’re employed for a public project. The government will actually demand a construction company to help secure a host of bonds before they work on a particular project. The bond will assurance 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 reached their limit, the duty would fall to the surety company.
Applying For A Surety Bid Bond
Insurance providers usually offer Bid Bonds, but there are standalone surety businesses that usually specialize in these unique products. Surety companies will truly be licensed by a state Department of Insurance so you must check it first before you avail. It won’t be simple to apply for a bond since the applications will need to proceed through a background checking procedure. The bond underwriters will evaluate the financial history of the candidates, credit profile and other important aspects.
It indicates that there’s a possibility that you will not be accepted for a Surety Bid Bond, specially if your credit history is bad.
How Much Are You Going To Spend?
There is no specific cost for a Surety Bid Bond as it will depend on several reasons like the bond type, bond amount, where the bond will be issued, contractual risk, the credit rating of the applicant and a lot more.
There are plenty of bonds today and the cost will depend upon the kind of bond that you could actually obtain. The amount of the bond may also be an issue because you may get a $10,000 bond or a $25,000 bond.
In case you have a credit rating of above or near 700, you will qualify for the standard bonding market and you will only pay a premium that’s 1 to 4 percent of the Surety Bid Bond amount. If you are going to obtain a $10,000, it will cost around $100 to $400.
The Approval Of Your Request
There’s a possibility that your license and permit bond request will likely be rejected by the insurance businesses and it will depend on their background check. As soon as they actually believe that giving you a bond will likely be a big risk, they won’t release a Surety Bid Bond for you.
Credit rating may also be an issue because in case you have a bad credit score, it will be hard for you to obtain a Surety Bid Bond because the companies believe that you are a risk. In case you have a poor credit rating, you can be accepted for the bond, but you must pay an interest rate of 10 to 20 percent.
There’s a chance that your application would be refused so you must look into the requirements before applying.
You must know that a Surety Bid Bond is vitally important for companies, especially if they are considering a government project. Bid Bonds will be used for many things, but they have one thing in common – they will usually secure the obliged.