West Virginia 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 West Virginia Bid Bonds?
West Virginia bid bonds are a form of bid security that provides financial protection for construction project owners. A bid bond serves as a guarantee that the bidder (the bond’s “principal”) is:
- submitting a firm, realistic bid price,
- can obtain the necessary performance and payment bonds, and
- will enter into a contract with the project owner (the bond’s “obligee”) if chosen as the winning bidder.
The bond also ensures that the obligee will be compensated for any resulting financial loss if the principal does not live up to that guarantee.
Who Needs Them?
In West Virginia, any contract to be awarded by any state entity (including all municipalities and county boards of education) through competitive bidding requires bidders to furnish a bid bond or other form of bid security. The bond must be for an amount equal to 5% of the bid price. Private construction project owners also may require bid bonds.
How Do West Virginia Bid Bonds Work?
In addition to the obligee and the principal, there is a third party to every bid bond—the bond’s guarantor (the “surety”). The principal bears the full legal obligation to pay a valid claim submitted by the obligee. As the guarantor, the surety will pay the claimant directly to resolve the matter smoothly but has no legal responsibility for the claim amount. The surety’s initial payment of the claim is, in fact, an extension of credit to the principal, who must then repay the resulting debt. Failing to do so can lead to a lawsuit by the surety to recover the funds.
How Much Do They Cost?
Bid bonds are quite important in West Virginia. Here's how a surety could approach the bid bond procedure:
- when underwriting bid bonds for smaller contracts, the contractor's personal credit history is a key factor in assessing financial reliability;
- as projects scale up, the underwriting process delves deeper by conducting a comprehensive analysis of the project's specific location, the contractor's stability, and a review of the bid documents,
- the obligee, typically the project owner, determines the required bond amount,
- they then determine a range between 5% and 10% of the total bid.
Surety Bond Professionals provides bid bonds to West Virginia contractors at no additional cost when they purchase a Performance and Payment (P&P) bonds through us.
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