Idaho 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 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?
In Idaho, the project owner is the obligee and is responsible for determining the required bid bond amount. This sum is often 5% or 10% of the overall bid value for the project.
Surety Bond Professionals does not charge contractors for bid bonds. The bid bond is granted with the mutual agreement that, upon the contract being awarded, contractors will obtain Performance and Payment (P&P) bonds with the surety.
When it comes to smaller contracts and businesses, the primary focus is on the contractor's personal credit history for underwriting. When the organization is larger, however, underwriters delve further. They examine the project's location, as well as the contractor's financial status and overall creditworthiness.
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