Get NE Gene Lilly Surety Bonds Contractor Questionnaire Form

The bid percentage (usually five or ten percent 5, 10%) is forfeited if you don't accept the job. The Bid Bond prequalifies the principal and provides the necessary security to the owner or general contractor, or “obligee,” guaranteeing that the principal will enter into the contract, if it is awarded.

The bid bond guarantees the developer that if the principle is awarded the job, he or she will fulfill the terms of the contract including obtaining any other bond requirements such as a performance bond and a payment bond.

The amount depends on the bid packet. It varies from 5-15 percent of the bid price. It means if the contractor fails to fulfill the bid term, the project owner can claim this much amount from the surety provider. The contractor can take cover for all bid bonds required in a year.

There are three parties to a bid bond: the principal, the obligee, and the surety. The principal is the contractor purchasing the bond, while the obligee is the project owner or GC protected by the bond. The surety company is the company providing the bid bond.

Protections: Bid bonds and payment bonds are both obtained by a project contractor, but protect different groups. Bid bonds provide legal and financial protection for project owners against changing terms, while payment bonds provide financial protection to the workers and suppliers on a project.