Your Word Is Your Bond: What You Need To Know About Bid Bonds
If you've recently earned your contractors license, and you're going out on your own, you're going to need bid bonds. If you're not familiar with bid bonds, they're part of the bonding requirements you'll need before you can sign contracts for construction projects. Bonds are a form of insurance that protects you from various types of liability during the construction process. Here are four things you need to know about bid bonds.
You Need the Bond Before You Bid
Now that you're a licensed contractor, you're going to be submitting a lot of bids. Just about every job to get will start with a bid. However, before you can bid on construction projects, you'll need a bid bond. A bid bond ensures that you'll take the job if you're awarded the project, that you'll do the job for the agreed-upon amount, and that you'll finish the job without asking for increases in the payment.
You Need the Bond as Protection Against Liability
When it comes to bidding on construction projects, you're going to need the bond as protection against liability. You never know when a situation beyond your control will arise that will result in a disgruntled client. You need to know that you're protected should those situations arise.
You Need to Apply for the Bid Bond
When you need a bid bond, you can't just go out and purchase one. You need to apply for a bid bond through the appropriate channels. That means you'll need to find a bonding agency in your area that will do the paperwork for you. This is the time when you need to make sure that everything about your business is in order. The bonding agency is going to go over your business records with a fine-tooth comb. They'll also go over your credit report. If there are problems with your business records or your credit report, you may not receive the bond that you're in need of, which will bring your business to a grinding halt. If you're going to be applying for a bid bond, make sure that everything is in order.
You Need To Avoid a Bond Claim Against Your Record
Your bid bond will protect you against liability should a claim be filed against you. However, you want to avoid claims at all costs. If a claim is filed against you, and it's found to be valid, you will have a difficult time obtaining future bonds. Not only that, but the claim will go on your permanent record, which means that potential clients will know that you didn't fulfill a contract obligation. To protect your business, try to avoid claims against your license.