A bid bond is a financial promise that a bid for a project has been submitted in good faith and that you (the potential contractor) intend to enter the contract at the price you tendered. It’s often used in the construction industry and other project and contract-based industries.
Qualifying for a bid bond is somewhat like applying for a credit card, line of credit or other banking loan. Your financials are a key component to your eligibility. It is not guaranteed, which is why your application needs to be as strong as possible. Rogers Insurance can help you put the best application forward to secure the bonds you need for your business.
Request a bid bond quote online, by phone, or at one of our offices. Or you can read on to learn more about bid bonds and surety insurance.
Areas We Serve
- Red Deer
- Fort McMurray
- Red Deer
- … and more communities across Alberta
Why Choose Rogers Insurance as Your Bid Bond Broker?
Rogers Insurance bid bond brokers offer:
- Access to bid bond markets
- Industry expertise
- Unparalleled experience
- No gaps in service
Our bid bond brokers can help you navigate the prequalification process and have the experience and expertise to build the best possible application. Contact us today to begin this process.
Who needs a bid bond?
Bid bonds are most used by construction contractors. Other types of bonds are used in other industries as well.
How much do bid bonds cost?
The cost of bid bonds is included in the annual service fee of your bonding account.
How to Qualify for Bid Bonds
To qualify for a bid bond, you will need to establish that you have the capability and financial security to complete the job you’re promising to do. Rogers Insurance bid bond brokers can help you through the qualification process and put together a strong bonding application.
For example, let’s say a drywaller is applying for a bid bond:
- Review the drywaller’s resume and education to ensure they can do the work.
- Review the resume and education of any employees to ensure they can do the work.
- Prove that the drywaller has the equipment to do the work (usually through an inventory of equipment and tools).
- The drywaller is now prequalified for character and capacity, so we proceed to reviewing the financials in order to confirm they have the financial ability to complete the work. This includes reviewing financial statements, credit reports and more.
- We put together a final application and apply to markets.
The stronger the contractor is financially, the easier it is to get bonds. Unfortunately, many bid bond brokers do not have the expertise to read financials in order to put forward the best application. Luckily, Rogers Insurance’s bid bond brokers do have these skills and can create the strongest application possible.
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.