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Bid Bonds

Our company develops and maintains websites. We are considering bidding on a municipal contract which requires a bid bond. Where can we obtain such a bond and what exactly is it?

A bid bond is one of many types of surety bonds, an agreement under which one party, the surety (usually an insurance company), guarantees to the obligee (your client), the performance of an obligation by the principal (you). The obligation may involve the payment of a debt or the timely completion of a project. There are literally hundreds of applications for bonds of different types.

Bid Bonds are bonds which guarantee that a contractor will enter into a contract at the amount bid and post the appropriate performance bonds. These bonds are used by owners to pre-qualify contractors submitting proposals. These bonds provide financial assurance that the bid has been submitted in good faith and the contractor will enter into a contract at the price bid.

Bid bonds can be purchased from your independent insurance agent. The process is more like getting a loan than buying insurance. Underwriters rely on the “Three C’s” in determining who will receive a bond. Character (integrity and reliability), Capability (or capacity), and Capital (of utmost importance) which is the financial strength backing the pledge. Financial statements are often required.

The process is complex and adequate time must be allowed for a bond to be written.

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Anchor Agency, Inc.
Pioneer Plaza
652 Albany Shaker Road
Albany, NY 12211

Phone - 518.730.3200
Fax - 518.730.3199
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The Hartford