What is a Bid Bond in Pennsylvania?
A bid bond is a type of surety bond, that guarantees that the bidder will enter into the contract and complete the contract according to its terms. It provides assurance to the project owner that the bidder has the ability and capability to finish the job once you are selected after winning the bidding process. The basic reason is that you need one so that you get the contract. But the bigger question is why are more owners/developers requiring a bid bond in the first place? The simply explanation 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 finish the work. So, they require a some protection.
Just fill out our bond application here and email it to [email protected] - click here to get our Pennsylvania 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 (5%) or ten (10%) percent, is forfeited if you don’t accept the job).
How much does a Bid Bond Cost in Pennsylvania?
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 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 PA?
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 Pennsylvania. 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 Pennsylvania?
We make it easy to get a contract bid bond. Just click here to get our Pennsylvania Bid Bond Application. Fill it out and then email it and the Pennsylvania 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 and performance bonds and then submit it to the surety that we believe will provide the best bid and performance bond for your contract. We have a excellent success rate in getting our clients bid bonds at the best rates possible.
What is a Pennsylvania 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 forfeiture 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 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 Rhode Island Bid Bond page here.
More on Bid Bonds https://swiftbonds.com/bid-bond/.
Clear-Cut Suggestions When Thinking Of Bid Bonds Defined
Surety Bid Bond is vitally important for anybody, but this is quite complicated if you don't know anything in regards to this. This isn't really an insurance claim, however it is a type of guarantee that the principal will do the work effectively for all the obliged.
You need to know that most folks will need you to get a certain bond before they go for your services because this will likely be a form of guarantee to them. Because they actually want this from you, it is essential to look for an insurance company which will provide this to you.
If you wish to get a license bond, permit bond, commercial bond and more, you should know more about Bid Bonds. Listed here are the things that you must know.
A Basic Explanation On Bid Bonds
Bid Bonds will always be required by the public as it will secure them and it'll guarantee that the principal will fulfill their commitments. As the principal, you must get a license Surety Bid Bond to guarantee that your company will stick to the laws and you need a contract bond to ensure that a public construction project will be completed. These are only a few examples which will offer you an idea about Bid Bonds.
This is actually made for the consumers because they will likely be protected by the bond, but it may provide advantages to you as well as they would trust you if you have this.
The Work Of A Surety Bid Bond
Bid Bonds are often known as a three-party agreement between the principal, the obliged and the surety company. The obliged is in fact the project owner and the principal is the employer or company that will perform the work. Construction businesses are frequently required by the law to acquire Bid Bonds when they are hired for a public project. The government will require a construction company to get a host of bonds before they're allowed to work on a specific project. The bond will guarantee that the subcontractors and the other workers might be paid even if the contractor will default. The contractor will probably be covering the losses, but when they already reached their limit, the duty will fall to the surety company.
How Do You Apply For A Surety Bid Bond?
Bid Bonds are generally provided by insurance providers, but you are going to have some standalone surety businesses which will focus on these products. A surety company should be licensed by a state Department of Insurance.
It is difficult to apply for a bond as the applicants will really experience a process that's similar to applying a loan. The bond underwriters would evaluate the financial history of an applicant, credit profile and other important aspects.
This means that there's a chance that you will not be accepted for a Surety Bid Bond, specially once the bond underwriters saw something from your credit rating.
The Cost Of A Surety Bid Bond
You may anticipate that a Surety Bid Bond won't have a fixed cost as it will depend upon different reasons such as bond type, bond amount, where the bond will be issued, contractual risk, the credit rating of the applicant and many more.
There are tons of bonds available right now and the cost will always depend upon the type of bond that you'll get. The amount of bond that you are going to get can also be an issue because you can get a $10,000 bond or a $25,000 bond.
In case you have a credit rating of above or near 700, you will truly qualify for the standard bonding market and you only need to 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.
Is There A Chance Of Being Denied?
There's a possibility that your license and permit bond would be denied by the insurance companies and it will always depend on 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 will probably be a deciding factor as well because if you will have a bad credit rating, it will probably be difficult to get a Surety Bid Bond because companies will think of you as a risk. For those who have a bad credit rating, you will still be approved, but you should pay an interest rate of 10 to 20 percent.
If you'd like to get your Surety Bid Bond, you have to be sure that you understand the process so you will not make a mistake. It will not be simple to apply, but if the requirements are met and you are eligible, you will get a Surety Bid Bond.