What is a Bid Bond in Michigan?
A bid bond is one of the types of surety bonds, that 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 ability and ability to finish the job once you are selected after winning the bidding process. The basic reason is that you need one to get the contract. However, the bigger question is why are more owners/developers requiring a surety bid bond? The simple answer is risk. Given the uncertainty of the marketplace, which includes long-time contractors going out of business, to municipalities filing bankruptcy (or just slow paying), has led to owners being afraid that their contractors will be unable to complete the job. Thus, they require a some protection.
Just fill out our bond application here and email it to [email protected] – click here to get our Michigan 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 Michigan?
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 P&P bond if you get the job. The cost of a surety 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 MI?
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 Michigan. 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 Michigan?
We make it easy to get a contract bid bond. Just click here to get our Michigan Bid Bond Application. Fill it out and then email it and the Michigan bid specs/contract documents to [email protected] or fax to 855-433-4192.
You can also call us at 913-225-8501. We review all 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 surety bid bonds at the very best rates possible.
What is a Michigan 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 5% or 10%) is a damages calculation 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 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. This is performance security for the owner of the project.
Who Gets the Surety Bid 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). 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, performance and payment bonds in each of the following counties:
See our Minnesota Bid Bond page here.
More on Surety Bid Bonds https://swiftbonds.com/bid-bond/.
News On How To Locate Bid Bonds
You’ll need to understand that a Surety Bid Bond is essential to any individual, but it’s quite complex if you do not have any idea relating to this. This isn’t an insurance claim because this is a type of assurance that the principal will correctly do their job. You’ll need to know that some folks will certainly require you to get a particular bond before they go for your services since it will also be a type of assurance to them. Since they need this type of thing from you, it will be very important to search for an insurance company that can offer this to you. If you genuinely wish to consider a license bond, permit bond, commercial bond and more, you have to know what it means.
A Basic Explanation On Bid Bonds
Bid Bonds will likely be required by the public because it can secure them and it may also guarantee that the principal will fulfill their duties. As the principal, you must obtain a license Surety Bid Bond to guarantee that your company will stick to the laws and you need a contract bond to be sure that a public construction project will likely be completed. These are just a few examples which will give you an idea about Bid Bonds.
This is made for the clients since they will be protected by the bond, but it may also provide benefits to you because they will trust you if you have this.
How Does It Work?
Bid Bonds are a three-party agreement between a surety company, the principal and the obliged. The principal is the employer, individual or company that will carry out the work while the obliged is the project owner.
Construction companies would be asked for by the law to have their Bid Bonds when they’re chosen for a public project. Once the government demands a construction company to do something, the winning contractor should secure a host of bonds.
The bond will assure that the sub-contractors and the other employees will likely be paid even if the contractor defaults. The contractor will likely be accountable in addressing any losses, but as soon as they already reached their limit, the duty will fall to the surety company.
The Application For A Surety Bid Bond
Bid Bonds are actually provided by insurance companies, but you may always search for standalone surety companies that will concentrate on these products. It won’t be simple to apply for a bond since the applicant will have to experience a strict process that is comparable to applying for a loan. The bond underwriters will evaluate the financial history of the applicant, their credit profile and other important aspects to be sure that they deserve to be approved. It signifies that there is a chance that you will be denied for a Surety Bid Bond, specifically when the underwriters found something bad on the credit history.
How Much Are You Going To Spend For This?
There isn’t any fixed when you’re thinking about a Surety Bid Bond as it can still depend upon various reasons like the bond type, bond amount, where the bond will be issued, contractual risk, credit score of the applicant and more. There are thousands of bonds available today and the cost will depend upon the type that you plan to acquire. The amount of bond will be an issue because you could always get a $10,000 bond or a $25,000 bond. If your credit rating is above or near 700, you will undoubtedly qualify for the standard bonding market and you only need to pay about 1 to 4 percent of the Surety Bid Bond amount. If you can get $10,000 bond, it will only cost $100 to $400.
Your Application Could Be Refused
There’s actually a chance that your license and permit bond request will likely be refused by the surety company because it will invariably depend upon the info that they can get from the background check. If the surety company thinks that it will likely be a risk for them to offer you a Surety Bid Bond, they will deny your application. Your credit score is one of the most important factors to be accepted for a surety body because in case you have a bad credit score, it will likely be tough to get a Surety Bid Bond.
If you can get a Surety Bid Bond even if you have a bad credit score, you will really pay an interest rate of 10 to 20 percent.
You must understand that a Surety Bid Bond is very important for businesses, especially if they will likely be doing 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.