New Hampshire Bid Bonds

New Hampshire 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 New Hampshire Bid Bonds?

New Hampshire bid bonds are surety bonds that contractors may be required to purchase when competing against other contractors for a construction job. The purpose is to protect project owners (both public and private) against the financial consequences of choosing as the winning bidder a contractor that:

  • Submitted an inaccurate bid,
  • Cannot qualify for performance and payment bonds, or
  • Does not accept the job and enter into a contract.

In furnishing a bid bond, the contractor (the bond’s “principal”) guarantees that none of the above will happen. If any of these do occur, the bid bond provides a way to compensate the project owner (the bond’s “obligee”) for monetary damages.

Who Needs Them?

In New Hampshire, as in most states, bid bonds may be required in a competitive bidding situation, particularly when the estimated value of a project exceeds a certain threshold. Most bid bonds are in an amount equal to 5% to 10% of the total bid price.

How Do New Hampshire Bid Bonds Work?

The obligee and the principal are two of the three parties to a New Hampshire bid bond. The third is the bond’s guarantor (called the “surety”). The principal bears the full legal obligation to pay a valid claim submitted by the obligee. To guarantee that payment, the surety has agreed to extend credit to the principal for the purpose of compensating the obligee. 

But money doesn’t actually pass through the principal’s hands. Instead, the surety will pay the obligee directly, and the principal will repay the resulting debt. A principal who does not repay the surety is likely to become the defendant in a lawsuit aimed at recovering the funds.

How Much Do They Cost?

At Surety Bond Professionals, we offer bid bonds to contractors in New Hampshire at no expense. It's important to understand that these bid bonds are typically issued with the condition that, if the contractor is awarded the project, they will proceed to purchase the necessary Performance and Payment (P&P) bonds through our surety to move forward with the construction work.

But generally, in New Hampshire, the cost of bid bonds is established by the project owner, who acts as the obligee for the bid bond. The specific bond amount required typically represents 5% or 10% of the total bid value for the project.

For smaller contracts and enterprises, the primary focus during underwriting is often the contractor's individual credit history. However, when it comes to larger projects in New Hampshire, underwriters may engage in a more thorough evaluation. This evaluation can encompass a detailed analysis of the project's location, as well as a comprehensive assessment of the contractor's financial stability and creditworthiness. These factors collectively contribute to determining the final cost of the bid bond.

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