Bid bond
A type of construction bond issued and guaranteed by a surety carrier to provide financial coverage to a principal.
A bid bond is a type of surety bond that protects the project owner by ensuring that the winning bidder will undertake the contract at the bid price. It provides financial assurance and reduces the risk of project abandonment or non-performance. In construction, a bid bond is often purchased by a contractor hired to perform the work for an Owner to act as an insurance policy for compensating the Owner in the event that the contractor fails to honor the terms of the awarded bid.
Used in a sentence
To ensure our bid is taken seriously, we must submit a bid bond along with our proposal.
Synonyms/variation
Bid Security
Surety Bond
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