What is a Bid Bond in Virginia?
A bid bond is a type of surety bond, that guarantees that the bidder will enter into the agreement and complete the contract according to its terms. It provides assurance to the project owner that the bidder has the knowhow and capability to complete the job once you are selected after the bidding process. The basic reason is that you need one in order to get the job. However, the larger question is why are more owners/developers requiring a bid bond? The simply explanation 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 to complete 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 Virginia 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 Virginia?
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 P&P 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 VA?
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 Virginia. 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 Virginia?
We make it easy to get a contract bid bond. Just click here to get our Virginia Bid Bond Application. Fill it out and then email it and the Virginia 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 bid and P&P bonds and then submit it to the surety that we believe will provide the best surety bid bond for your contract. We have a great success rate in getting our clients surety bonds at the best rates possible.
What is a Virginia 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 decide not to take the work.
Find a Bid Bond near Me
Typically, a bid bond and performance/payment 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 obtains 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 bonds, performance and payment bonds in each of the following counties:
Isle of Wight
King and Queen
See our Washington Bid Bond page here.
More on Surety Bid Bonds https://swiftbonds.com/bid-bond/.
Locating Where To Find Distinct Ideas When Looking At Bid Bonds
Surety Bid Bond is extremely important for anybody, but this is quite complex if you do not know anything regarding this. Fundamentally, this isn't an insurance claim, but it's a form of guarantee that you, as the principal, will perform the work correctly for the obliged.
You have to know that most folks would require you to obtain a certain bond before they select your services as this will likely be a form of guarantee to them. Because they need this type of thing from you, it is essential to try to find an insurance company which will provide this to you.
If you have to obtain a license bond, permit bond, commercial bond and more, you are going to understand what Surety Bid Bond means. Listed here are the things that you need to know.
An Explanation On Bid Bonds in Virginia
Bid Bonds will be required by the public since it can secure them and it may also guarantee that the principal will fulfill their duties. As the principal, you need to get a license Surety Bid Bond to guarantee that your company will adhere to the laws and you need a contract bond to make sure that a public construction project will likely be completed. These are some examples that would offer you an idea about a Surety Bid Bond.
This is actually made for the consumers as they will be protected by the bond, but it could provide advantages to you as well since they would trust you if you have this.
How Does It Work
Bid Bonds could be regarded as a three-party agreement between a surety company, the principal and the obliged. The principal is actually known as the employer or company that can perform the work and the obliged is the project owner. Construction businesses will always be necessary to purchase Bid Bonds as soon as they will work on a public project. The government will likely be requiring a construction company to secure a host of bonds once they want to continue with the project.
The main function of the bond is actually for the sub-contractors and employees to make certain that they will likely be paid even when the contractor defaults. The contractor will be covering the losses, but as soon as they reached the limit, the duty will undoubtedly fall to the surety company.
Applying For A Surety Bid Bond
Bid Bonds are usually provided by insurance companies, but you'll have some standalone surety companies which will concentrate on these products. Surety businesses are licensed by a state Department of Insurance.
It is not easy to apply for a bond because the applicants will obviously experience a process that is similar to applying a loan. The bond underwriters will evaluate the financial history of an applicant, credit profile, managerial team and other important aspects.
It will mean that there's a chance that you won't be approved for a Surety Bid Bond, specially if the bond underwriters saw something negative.
How Much Are You Going To Spend For This?
There is no specific cost with regards to a Surety Bid Bond since it will still depend on various reasons such as the bond type, bond amount, where the bond will probably be issued, contractual risk, credit rating of the applicant and more. There are thousands of bonds available today and the cost would depend on the type that you plan to get. The amount of bond will probably be an issue because you could always get a $10,000 bond or a $25,000 bond. If you actually have a credit history that is above or near 700, you will qualify for the standard bonding market and you need to pay about 1 to 4 percent of the Surety Bid Bond amount. If you will get a $10,000 bond, it will only cost $100 to $400.
Is There A Chance Of Being Denied?
There is a possibility that your license and permit bond would be denied by the insurance organizations and it will always depend upon the background check that they did. If they actually believe that you're 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 will likely 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 history, you will still be approved, but you should pay an interest rate of 10 to 20 percent.
You must know that a Surety Bid Bond is extremely important for companies, particularly if they are considering a government project. Bid Bonds will truly be used for plenty of things, but they have one thing in common - they always secure the obliged.