Bid Bond: What Should You Check in Your Bond Provider?


Bid bonds are a common type of surety bond. As the name suggests, this bond is used in the bidding process for public works projects. A bid bond guarantees that the bidder will enter into the contract and provide a performance bond if awarded the project.

Bid Bond: What Should You Check in Your Bond Provider

This article will discuss a bid bond and what to look for when choosing a provider.

So, what is bid bond?

It is a type of surety typically required by government agencies and large organizations when soliciting bids for construction projects.

The purpose is to protect the organization from financial loss if the winning bidder fails to meet the terms of their bid.

Who is Involved in a Bid Bond?

There are three parties in a bid bond: the principal (the bidder), the obligee (the entity soliciting bids), and the surety (a bonding company that guarantees the performance of the principal).

1) Principal: The bidder is the party seeking a contract. They must submit a bid to get the job, usually a sealed envelope. The bid includes how much it will cost to complete the work specified in the obligee’s request for bids (RFB).

If the bidder is awarded the contract, they are obligated to complete the work for the specified price. If they cannot or do not complete the work, they may be liable to pay damages to the obligee. The principal is also required to provide a bid bond to the obligee.

2) Obligee: The obligee is the party soliciting bids, usually a government entity. The bid bond protects the obligee if the principal bidding on the project does not follow through with their bid.

The obligee will require a bid bond when they seek bids for a project to ensure that all bidders are serious about the project and that there is some financial protection in place if the winning bidder does not follow through.

3) Surety: A surety is an organization or individual that assumes the responsibility of paying the debt in case the debtor policy defaults or is unable to make the payments.

Thus, working with a reputable and experienced surety company will benefit from bidding on large-scale construction and other government projects.

Other Tips to Choose a Bond Provider

What is a bid bond? Now you know that, so it is essential to do your research to find one. Here are a few other tips to keep in mind when you are looking for a bid bond provider:

1) You Must Check and Compare the Prices

When looking for a bid bond provider, it is essential to compare prices because the rates can vary significantly from one company to another. Make sure to get quotes from at least three different providers before making your decision.

The price will depend on:

  • Type of bond you need
  • Amount of the bond
  • Your credit score
  • Length of time you need the bond for

2) Check Online Reviews and Testimonials

When searching for a bond provider, it’s essential to check their website and read online reviews and testimonials.

It will give you a more well-rounded idea of what others think of the company. Visiting sites like the Better Business Bureau can be helpful in this research.


A bid bond is an inevitable part of the construction bidding process. It is a way of protecting the interests of all parties involved in a construction project.


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