Washington Bid Bonds

Washington 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 Washington Bid Bonds?

The purpose of Washington bid bonds is to provide financial protection for public or private project owners in the event that a contractor:

  • Submits an inaccurate or unrealistic bid and then can’t do the work for that price,
  • Cannot qualify for the necessary performance and payment bonds if chosen as the winning bidder, or
  • Does not accept the job if offered the contract. 

A Washington bid bond is a contractor’s guarantee that the project owner will not experience a financial loss due to any of these scenarios. If such a loss does occur, the bond provides a way for the contractor (known as the bond’s “principal”) to compensate the project owner (the bond’s “obligee”). 

Who Needs Them?

Washington contracting authorities can require a bid guarantee for contracts valued in excess of $100,000. The bid guarantee can be in the form of a certified check, but most contractors choose to purchase a surety bond, which must be in an amount equal to 5% of the bid price. Private project owners may also impose a bid bond requirement. 

How Do Washington Bid Bonds Work?

The bond’s guarantor (called the “surety”) is the third party to a Washington bid bond. While the principal bears the full legal obligation for paying claims, the surety guarantees that they will be paid. Therefore, the surety will pay a claim initially, which creates a debt owed by the principal to the surety. Failing to repay the surety can result in the principal being sued to recover the funds. 

How Much Do They Cost?

The premium rate is based on the risk of the surety not being repaid for claims paid on the principal’s behalf. The principal’s personal credit score is considered the best measure of that risk when underwriting smaller contracts and businesses in Washington. For larger projects, the underwriters may also consider the project's location, the contractor's stability and creditworthiness, and other factors.

The project owner, who is the obligee for the Washington bid bond, determines the required bond amount. This usually amounts to 5% or 10% of the total bid amount. 

At Surety Bond Professionals, we offer bid bonds without charge. However, there is a requirement that if the contractor is awarded the contract, they must purchase performance and payment bonds through the surety to move forward with the project.

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