How a bid bond works
Three parties are involved. The bidder is the principal. The owner is the obligee. The surety is the company that issues the bond. The selected bidder may refuse to sign the contract or fail to supply the required bonds. The owner can then make a claim. The surety then looks to the bidder to repay it.
Where the requirement is stated
Look in the invitation to bid and the instructions to bidders. They state if bid security is required, the amount and the acceptable form. The amount is usually set as a percentage of the bid. Some owners accept a certified check in place of a bond. Many owners require their own bond form.
Do subcontractors need a bid bond?
The owner's requirement applies to prime bidders. A general contractor can still ask major subcontractors for a bid bond. It depends on the contractor and the size of the subcontract. Read the general contractor's bid invitation and ask early. A surety needs time to issue a bond.
How to get one
- Work with an insurance agent or broker who handles surety bonds.
- Supply the financial statements and work history the surety asks for.
- Tell the agent about each bid as soon as you decide to pursue it.
- Give the agent the owner's required bond form, if there is one.
- Check the bond for the correct project name, owner and bid date.
Bid bond and other bonds
- A bid bond covers the period from the bid to the signing of the contract.
- A performance bond covers completion of the work.
- A payment bond covers payment to subcontractors and suppliers.
Bond rules differ by owner and by state. Check the bid documents for the job, and ask your surety agent or attorney. This article is general information, not legal advice.
Takeoff Tool reads cover facts such as bonds from the packet. Each one shows the quote it came from.
Bid documents · Updated 11 Nov 2026