South Carolina 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 South Carolina Bid Bonds?
South Carolina bid bonds provide financial protection for project owners against financial losses by guaranteeing that the winning bidder in a competitive bidding situation:
- Has submitted an accurate bid,
- Can qualify for any performance and/or payment bonds required before entering into a contract, and
- Will accept the job if offered the contract.
If a bidder’s failure to live up to this guarantee causes the project owner (known as the bond’s obligee) financial harm, the bid bond provides a way to compensate the obligee for any loss. The contractor (the bond’s “principal”) is legally obligated to pay a valid claim by the obligee.
Who Needs Them?
Bid bonds most often are required in South Carolina for public works jobs expected to cost in excess of $25,000. Private project owners may also require bid bonds. In most cases, the required bond amount is between five and ten percent of the bid amount.
How Do South Carolina Bid Bonds Work?
A South Carolina bid bond brings together three parties with different interests. One party, in addition to the obligee and the principal, is the bond’s guarantor (referred to as the “surety”).
In the guarantor’s role, the surety is responsible for making sure a valid claim is paid. But the legal obligation to pay it belongs exclusively to the principal. The surety will pay the claim initially, as an extension of credit to the principal. The principal is not relieved of the obligation to pay but will be repaying the surety instead of paying the claimant directly. The surety has the right to sue the principal if that’s what it takes to recover the unpaid debt.
How Much Do They Cost?
The role of underwriting changes based on the size of the company. Smaller contracts and businesses will be evaluated based on the contractor's personal credit history. Underwriters perform a more detailed review as the size of projects develops. This includes:
- assessing the project's unique location,
- assessing the contractor's stability,
- and thoroughly investigating their creditworthiness.
Bid bonds are an important part of protecting contractors and other parties in South Carolina. The obligee decides the bond amount, which is normally 5% to 10% of the entire bid. Surety Bond Professionals offers contractors in South Carolina Bid Bonds at no additional cost. We can do this because contractors purchase Performance and Payment (P&P) bonds with us after winning the contract.
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