Wisconsin Bid Bonds

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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 performance bond needs.

What Are Wisconsin Bid Bonds?

Wisconsin bid bonds serve the important purpose of protecting construction project owners against the financial losses that often occur when a contractor does not accept a construction job after being chosen as the winning bidder. Such losses usually are the result of the contractor realizing that:

  • their bid was too low to make a profit on the job,
  • after being selected for multiple projects, they don’t have the resources to accept them all, or
  • they don’t qualify for the performance and payment bonds required to enter into a contract.

A Wisconsin bid bond is a contractor’s guarantee to accept the job if offered the contact. The bond also ensures that the principal will compensate the project owner for monetary damages caused by failure to live up to that guarantee.

Who Needs Them?

In Wisconsin, both government contracting authorities (state or local) and private construction project owners can require bidders to provide a bid bond. The bond typically must be for an amount equal to 5% to 10% of the bid price.

How Do Wisconsin Bid Bonds Work?

There are three parties to a Wisconsin bid bond—the contracting authority or private project owner, the contractor, and the bond’s guarantor, known respectively as the “obligee,” the “principal,” and the “surety.”

Although it’s the principal’s legal obligation to pay a valid claim, the surety has guaranteed that it will be paid. Therefore, the surety will pay the claim initially, but only as an extension of credit to the principal. The principal must then repay the resulting debt in accordance with the surety’s credit terms. Not repaying it is likely to result in the principal being sued by the surety to recover the funds.

How Much Do They Cost?

Bid bonds are essential in preserving the integrity of construction projects in Wisconsin. The obligee, who is frequently the project owner, decides the bond amount, which is normally 5% to 10% of the entire bid. Surety Bond Professionals provides bid bonds to Wisconsin contractors at no additional cost assuming they will obtain the required Performance and Payment (P&P) bonds with us after winning the contract.

The approach is nuanced when it comes to underwriting bid bonds. Smaller contracts and businesses are evaluated on the contractor’s personal credit history. Underwriters perform a more detailed review as the size of projects develops. This includes assessing the project’s unique location, assessing the contractor’s stability, and thoroughly investigating their creditworthiness.

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