What’s the difference between bid bonds and surety?
Surety is the industry; bonds are the product. A bid bond is a type of bond.
Are bid bonds a type of insurance?
Although you may see the term bid bond insurance used, bid bonds are different than normal insurance as you must qualify. This is different from other types of insurance. For example, auto insurance is a right as it is mandated by law that you must carry it. No driver can be refused basic coverage (although they may be charged high prices).
With bid bonds, you can absolutely be denied.
Why do I need a bid bond?
Bid bonds help prove to your potential client that the bid you submitted was in good faith and that you will enter the contract and complete the work at the price you bid.
Bid bonds help prevent potential unqualified contractors from submitting a bid just to win a contract and then changing the price or amount or type of work the contractor will perform. If the contractor fails to honour the terms of their bid and the potential client needs to find another contractor, the bid bond will compensate the potential client for the cost difference between the initial bid and the next-lowest bid, up to the amount of the bid bond.