Illinois Bid Bonds

Illinois 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 Illinois Bid Bonds?

The purpose of an Illinois bid bond, when one is required, is to protect the project owner against financial loss by guaranteeing that:

  • The contractor’s bid price is accurate,
  • The bidder can and will provide any necessary performance and payment bonds if awarded the contract, and
  • The contractor will accept the job and enter into a contract if chosen as the winning bidder. 

If the contractor (referred to as the bond’s “principal”) does not live up to that guarantee, the bid bond provides a way to compensate the project owner (the bond’s “obligee”) for monetary damages.

Who Needs Them?

Bid bonds are typically required from contractors bidding on public works construction projects, especially larger projects, in Illinois. Private project owners also have the option of requiring bid bonds when selecting a contractor through competitive bidding.

How Do Illinois Bid Bonds Work?

An Illinois bid bond is a legally binding agreement between the obligee, the principal, and a third party called the “surety.” The surety is the bond’s guarantor and guarantees that the principal will pay valid claims.   

Although the principal is legally obligated to pay a valid claim, the surety will pay the claim initially as an extension of credit to the principal. The principal’s obligation then shifts to repaying that debt to the surety. If the debt is not repaid according to the surety’s terms, the surety can sue the principal to recover the funds.  

How Much Do They Cost?

The cost of a bid bond can vary depending on several criteria such as the size and complexity of the project, the contractor's credit history, and others, but it usually ranges from 5 to 10% of the overall bid price. We at Surety Bond Professionals provide bid bonds to our clients at no cost. But, in order to proceed with the project, the contractor must acquire performance and payment bonds from the surety if they are given the contract.

In Illinois, the contractor's personal credit history is the main factor taken into account when underwriting smaller contracts and businesses. The location of the project, the stability and creditworthiness of the contractor, and other variables may also be taken into account by the underwriters for larger projects.

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