Idaho Bid Bonds

Surety Bond Professionals is a family owned and operated bonding agency with over 30 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 Idaho Bid Bonds?

When an Idaho bid bond is required, it’s because the project owner is seeking a guarantee that:

  • the contractor’s bid is accurate,
  • the contractor will be able to provide performance and payment bonds if awarded the job,
  • the contractor will accept the job if chosen as the winning bidder.

Additionally, requiring bid bonds discourages contractors from submitting frivolous bids.

Who Needs Them?

Idaho is not one of the states that require bid bonds from contractors vying for state-funded construction jobs through competitive bidding. Nonetheless, many project owners, both public and private, require the submission of bid bonds anyway, usually for 5% to 10% of the amount bid by the contractor.

How Do Idaho Bid Bonds Work?

There are three parties to every Idaho bid bond:

  • The project owner requiring the bond is called the “obligee,”
  • The contractor purchasing the bond is the “principal,” and
  • The party guaranteeing the payment of claims is known as the “surety.”

When the surety’s investigation of a claim submitted by the obligee determines that it’s valid, the principal is legally obligated to pay it. However, as the bond’s guarantor, the surety will pay it initially, to be reimbursed later by the principal. The surety can take legal action to recover the debt if it is not paid by the principal in accordance with the surety’s terms.

How Much Do They Cost?

Two figures go into calculating the premium for an Idaho bid bond: the required bond amount established by the obligee and the premium rate, which is the result of the surety’s underwriting. The underwriting process is essentially an assessment of the risk of the surety not being repaid for the credit extended in paying claims on the principal’s behalf. It relies heavily on the principal’s personal credit score.

A high credit score is strongly correlated with low risk to the surety, which means the premium rate will be low. A principal with a low credit score is considered to be a greater risk and warrants a higher premium rate.

A well-qualified principal typically will be assigned a premium rate in the range of .5% to 3%.

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