Connecticut Bid Bonds
Surety Bond Professionals is a family owned and operated bonding agency with over 75 years of experience. With access to a broad range of surety markets, our expert agents are ready to assist with all of your bid bond needs.
What Are Connecticut Bid Bonds?
Connecticut bid bonds, when required, serve multiple purposes:
- They guarantee that the bid submitted by the contractor is accurate.
- They guarantee that the contractor will be able to provide any necessary performance and payment bonds if awarded the contract.
- They provide financial protection for project owners when the winning bidder backs out and does not accept the job.
- They discourage contractors from submitting frivolous bids.
Who Needs Them?
Connecticut’s Little Miller Act does not mandate bid bonds from contractors competing for public works projects. However, many project owners do require bid bonds as a risk management strategy. Bid bonds are more commonly required for public works projects, but private construction project owners may also demand them from bidders. When a bid bond is required, the amount of the bond typically is 5% to 10% of the full bid price.
How Do Connecticut Bid Bonds Work?
A Connecticut bid bond is a legally binding contract among three parties referred to as the obligee, the principal, and the surety:
- The project owner requiring the bond is the “obligee,”
- The contractor purchasing the bond is the “principal,” and
- The party guaranteeing the payment of claims is the “surety.”
In the event of a contractor’s violation that ends up costing the obligee money, the obligee has the right to file a claim and be compensated if the surety determines that the claim is valid. But having guaranteed the payment of valid claims, the surety typically pays the claim initially, transforming the principal’s obligation to pay the claim to the legal obligation to repay the surety. Failing to pay that debt in accordance with the surety’s terms can subject the principal to legal debt recovery action.
How Much Do They Cost?
In Connecticut, the amount of the required bid bond is determined by the project owner, who also serves as the obligee. This sum is typically five to ten percent of the overall offer for the project. Surety Bond Professionals offers bid bonds to contractors at no cost. These bonds are offered on the premise that, if you are awarded the contract, you would work with our surety to secure Performance and Payment (P&P) bonds in order for the project to proceed.
The bid bond underwriting procedure is tailored to the project's size. For smaller contracts and businesses, the major priority is to evaluate the contractor's personal credit history. However, for larger projects, underwriters consider factors like the project's location, the contractor's overall trustworthiness, and their financial stability.
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