What is a Bid Bond in Ohio?
A bid bond is one of the types of surety bonds, that guarantees that the bidder will accept the project and complete the agreement according to its terms. The bid bond provides assurance to the project owner that the bidder has the expertise and capability to finish the job once the bidder is selected after winning the bid. The basic reason is that you need one so that you get the contract. But the larger question is why are more owners/developers requiring a bid bond in the first place? The simple answer is risk. Given the uncertainty of the marketplace, which includes experienced 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 complete the work. Thus, 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 Ohio?
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 OH?
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 Ohio. 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 Ohio?
We make it easy to get a contract bid bond. Just click here to get our Ohio Bid Bond Application. Fill it out and then email it and the Ohio 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 bonds and then submit it to the surety that we believe will provide the best bid and P&P bond for your contract. We have a very high success rate in getting our clients bid bonds at the best rates possible.
What is a Ohio 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 fine that is paid when you win the bid, but then refuse 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 Bond?
The general contractor is the entity that obtains 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, performance and payment bonds in each of the following counties:
See our Oklahoma Bid Bond page here.
More on Bid Bonds https://swiftbonds.com/bid-bond/.
Step-By-Step Successful Ideas When Thinking Of Bid Bonds
You will need to know that a Surety Bid Bond is critical for anybody, but this is complex if you do not know anything about it. This isn’t an insurance claim since this is a kind of guarantee that the principal will effectively complete the task. You’ll need to understand that some individuals will certainly require you to obtain a specific bond before they go for your services as it can also be a type of guarantee to them. They actually need this kind of thing from you so you should look for an insurance company that will offer this. If you really want to look at a license bond, permit bond, commercial bond and more, you have to understand what it means.
A Basic Explanation On Bid Bonds
Bid Bonds will actually be required by the public since it could secure them and it’ll guarantee that the principal would 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 make certain that a public construction project will be finished. There are examples that will offer an idea on Surety Bid Bond.
This is made for the customers since they will likely be protected by the bond, but it could also provide benefits to you since they will trust you in case you have this.
How Does It Work
Bid Bonds are considered as a three-party agreement between a surety company, the obliged and the principal. The principal is referred to as the employer or company that will complete the work and the obliged is the project owner. If a construction company will work on a public project, they will be necessary to get Bid Bonds. The government will be requiring a construction company to secure several bonds once they want to continue with the project.
The work of the bonds is for the subcontractors and workers to be sure that they will likely be paid even if the contractor will default. The contractor will cover any losses, but as soon as they reached their limit, the duty will fall to the surety company.
How Do You Apply For A Surety Bid Bond?
Bid Bonds are provided by insurance companies, but you could have some standalone surety companies that concentrate on these products. Surety businesses are licensed by a state Department of Insurance.
It will not be easy to apply for a bond since the applicants will need to go through a procedure that is very similar to applying for a loan. The bond underwriters will certainly check the credit profile of the applicant, their financial history and other important aspects.
It only signifies that there is still a possibility that you’ll not be approved for a Surety Bid Bond, specially if the bond underwriters actually saw something negative.
How Much Do You Should Spend?
You can’t really find an exact price for a Surety Bid Bond because its cost is always affected by numerous factors like bond type, bond amount, where it will likely be issued, contractual risk, credit rating of the applicant and more. There are actually thousands of different bonds available right now and the cost will really depend on the bond that you’ll get. The amount of the bond will likely be a factor because you could always select a $10,000 bond or a $25,000 bond or higher.
If you have a credit history of 700 and above or very near this number, you may definitely qualify for the standard bonding market and you just need to pay about 1 to 4 percent of the Surety Bid Bond amount. It only signifies that if you’ll obtain a $10,000 bond, you only have to pay $100 to $400.
Is There A Chance Of Being Denied?
There’s a possibility that your license and permit bond would be denied by the insurance businesses and it will always depend upon the background check that they did. If they think that it would be a big risk to offer a Surety Bid Bond, they will deny your application. Credit score can also be a deciding factor because if you actually have a bad credit score, it’s going to be hard for you to get a Surety Bid Bond because organizations are considering you as a risk. For those who have a bad credit history, you will still be approved, but you should pay an interest rate of 10 to 20 percent.
You have to know that a Surety Bid Bond is very important for companies, specifically as soon as they are considering a government project. Bid Bonds might be used for many things, but they all have one thing in common: they are all made to secure the obliged.