What is a Bid Bond in Utah?
A bid bond is a type of surety bond, which guarantees that the bidder will accept the project and complete it according to its terms. It provides assurance to the project owner that the bidder has the knowhow and wherewithal to complete the job once you are selected after winning the bidding process. The basic reason is that you need one so that you get the work. But the bigger question is why are more owners/developers requiring a bid bond in the first place? The 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 finish 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 Utah?
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 UT?
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 Utah. 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 Utah?
We make it easy to get a contract bid bond. Just click here to get our Utah Bid Bond Application. Fill it out and then email it and the Utah 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 application for bid and performance bonds and then submit it to the surety that we believe will provide the best surety bond for your company. We have a very high success rate in getting our clients surety bonds at the best rates possible.
What is a Utah Bid Bond?
A bid bond is a bond that provides assurance that you will accept the work if you win the contract. The bid fee (usually five (5%) or ten (10%) percent) is a penalty 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 corporation 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 performance and payment bonds in each of the following counties:
Salt Lake City
See our Vermont Bid Bond page here.
More on Surety Bid Bonds https://swiftbonds.com/bid-bond/.
Clear-Cut Recommendations When Thinking Of Bid Bonds Solved
You need to understand that a Surety Bid Bond is really important for anybody, however it is complicated if you do not know anything relating to this. This isn't an insurance claim as this is a type of assurance that the principal will properly do their job. You have to know that some people require you to get a bond before they will think about your services since it can be regarded as a type of guarantee to them. As they need this type of thing from you, it will probably be important to search for an insurance company which can offer this to you. If you actually want to consider a license bond, permit bond, commercial bond and more, you have to understand what it means.
The Significance Of A Surety Bid Bond
Bid Bonds are always required since they protect the public. It is a kind of guarantee that the obligations and duties will be completed. You need to get a license Surety Bid Bond to make certain that your company will abide by the laws and you usually obtain a contract bond to guarantee that a public project will probably be completed. A Surety Bid Bond is absolutely meant for the obliged as they are the ones that are being protected, but it may also benefit you since the clients will trust you if you have this. There are a lot of bonds today and the type of bond that you want to search for would depend upon the specific situation.
How Does the Contract Bid Bond Process Work?
Bid Bonds are regarded as a three-party agreement between a surety company, the obliged and the principal. The principal is actually referred to as the employer or company that can complete the work and the obliged is the project owner. Construction companies are often needed to purchase Bid Bonds if they are considering a public project. The government will likely be requiring a construction company to secure a number of bonds as soon as they want to continue with the project.
The work of the bonds is for the sub-contractors and employees to ensure that they will be paid even if the contractor will default. The contractor will cover the losses, but when they reached their limit, the duty will actually 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 businesses that specialize in this kind of service. Surety companies are often licensed by a state Department of Insurance so you have to check it first prior to deciding. It will not be easy to apply for a bond as the applications will have to proceed through checking before it's approved. The bond underwriters will have to look at the financial history of the applicants, credit profile and other important aspects.
This means that there's a possibility that you are going to not be approved for a Surety Bid Bond, specially if your credit rating is bad.
How Much Are You Going To Spend For This?
There's no fixed cost if you are talking about a Surety Bid Bond because it will still depend on different 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. It won't be a problem for the amount of bond because you will obtain a $10,000 bond or a $25,000 bond. If your credit rating is above or near 700, you will certainly qualify for the standard bonding market and you only have 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.
Is There A Chance Of Being Denied?
There's a chance that your license and permit bond will be denied by the insurance companies 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 also be a deciding factor because if you actually have a bad credit rating, it's going to be hard for you to get a Surety Bid Bond because businesses are considering you as a risk. For those who have a bad credit rating, you can still be approved, but you will have to pay an interest rate of 10 to 20 percent.
You must understand that a Surety Bid Bond is really important for businesses, specifically as soon as they will consider a government project. Bid Bonds will obviously be used for plenty of things, but they have one thing in common - they always secure the obliged.