Arizona Bid Bond
Anyone involved with the construction industry in Arizona should be prepared to get a bid bond if and when necessary. This page explains how and why you might need this type of surety bond.
What is an Arizona Bid Bond?
When a project owner issues a call for bids and selects a winning bid, sometimes the winner pulls out of the project unexpectedly. An Arizona bid bond pays the project owner when that happens. Essentially, it protects someone from the risk of awarding a bid to a contractor who can't or won't deliver the work promised.
Who Needs a Bid Bond in Arizona?
Project owners can require anyone submitting a bid to prove they have a bid bond as well. They are common on most large scale construction projects. However, anyone can include Arizona bid bond requirements as part of their construction plans. When required, bids aren't accepted from anyone without a bond.
Who are the parties involved in an Arizona Bid Bond?
Arizona bid bond agreements involve three distinct but interconnected parties:
- Principal - The contractor that obtains the bond before submitting bids to the obligee. If the principal pulls out of an awarded contract after the bid or is unable to obtain a required performance bond, they accept financial liability for paying the obligee.
- Obligee - The project owner seeking bids. If the principal exits a bid, the obligee may seek damages from the bid bond.
- Surety - The agency that issues the bond to the principal. The surety also guarantees the obligee payment for valid claims on the bond. When the surety pays, however, the principal must repay that debt plus interest and fees.
How Much Does a Bid Bond Cost in Arizona?
Bid bonds are typically (but not always) free because you will need to obtain one along with a performance bond, which holds you liable if you start on a project but don't perform according to the standards mandated in the contract. Work contracts will dictate how large a performance bond must be, of which the cost will be a small percentage. The exact cost partially depends on your credit. In the event that you do have to pay for a bid bond specifically, the cost is minimal.
How does an Arizona Bid Bond Work?
If a contractor pulls out of an awarded contract after the bid, the project owner can seek damages from the bond. The surety guarantees them payment, after which the surety collects the amount of the payment from the bonded contractor who abandoned the bid.
How to get a Bid Bond in Arizona?
It's easy to get the bond you need. Complete an application, submit to a credit check, and just 24 hours later (or less) you have a bond quote. After you pay the quoted price, copies along with the original Arizona bid Bond can be sent to you and/or the obligee.
Get a Free Quote for an Arizona Bid Bond today!
There's no reason to delay getting a surety bond - especially not when Viking Bond Service makes it so easy. We have helped countless contractors in Arizona get the bonds they need, bid and otherwise, and we're eager to earn your trust as well. If you have questions now or at anytime, please contact us here or call 1-888-278-7389.
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