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 performance bond needs.
What Are Nevada Bid Bonds?
Bid bonds are an essential kind of surety bond for construction projects in Nevada. By protecting against any financial losses, they are intended to provide project owners with financial security throughout the contractor selection process through competitive bidding. These losses could result from contractors putting in frivolous, erroneous, or unrealistic bids; from them not being eligible for necessary performance and payment bonds; or from them showing that they are unable or unwilling to take on the work after winning the bid.
In addition to assuring the bidder’s commitment to accept the contract, if one is offered, bid bonds also serve as a means of compensating the project owner for any monetary losses sustained in the event that a contractor breaches their agreement.
Who Needs Them?
All competitive bidding on government-funded construction projects in Nevada must include bid bonds. It is required that the value of the bond be at least 5–10% of the bid price. Additionally, private project owners, particularly for larger construction endeavors, may also specify bid bond requirements.
How Do Nevada Bid Bonds Work?
Three important parties get into a legally binding arrangement when it comes to Nevada bid bonds: the principal, who is the bidding contractor; the obligee, who owns the project; and the surety, who acts as the bond’s guarantee.
Should the obligee file a legitimate claim for monetary damages, the principal will have to make the payment. But, as an extension of credit to the principal, the surety steps in to cover the initial payment because it guarantees the payment. The principal then has to pay the surety back according to the credit terms that were previously agreed upon. If this isn’t done, the surety can take legal action to get the money back.
How Much Do They Cost?
The bid bond procedure in Nevada takes into account the following: The obligee, which is usually the project owner, establishes the amount of the necessary bond. Typically, this sum represents between 5% and 10% of the entire bid.
We at Surety Bond Professionals provide bid bonds to contractors in Nevada at no extra cost when they obtain Performance and Payment (P&P) bonds from us.
When evaluating financial stability for bid bonds for smaller contracts, the contractor’s individual credit history is crucial. As projects get bigger, the underwriting procedure gets more involved. This is because the location of the project is examined in detail, the contractor’s stability is examined, and their creditworthiness is evaluated.
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