Make Sure Your Business is Protected. Contact Us Today!

Call 1-800-350-1198 to speak with a licensed advisor today!

What is a Bid Bond?

A bid bond is a type of contract bond that serves as a security and a prequalification measure for a contractor’s bid during a bidding process.

Should the contractor be awarded the bid, the bond is there to guarantee that the contract will be executed at the bid price and under the conditions set forth in the bid. If the contract is not executed according to the bid, a claim against the bond can be made.

A bid bond further guarantees that if the contractor decides to withdraw from the bid after the bid has opened, a claim can be filed against the bond. There are some exceptions to this rule, but only if the contractor can prove that a mistake was made in their bid.

bid bonds work like all other surety bonds as agreements made between three parties. The obligee is the party requesting the bond (the project owner or the state), the principal is the party obtaining the bond (the contractor participating in the bid) and the surety bond company is the party issuing the bond, which is also responsible for its financial backing.

Most construction project bids require contractors or subcontractors to obtain a bid bond. Often, bids that are not backed by a bond are not accepted at all.

What Is The Cost For A Bid Bond?

Bid bonds usually cost around $100 per contract.

Keep in mind that the cost of the bid is not the amount of the bid bond. The amount of the bid bond is the amount of coverage that the surety is ready to extend to the obligee. In other words, if a successful claim is made against your bid bond, the surety will cover costs only up to the full amount of the bid bond.

The full amount of a bid bond is determined in relation to the amount of the contract. A bid bond’s full amount usually does not exceed 5-10% of the total amount of the contract.

For example, if the contract you are bidding on is $200,000, the amount of your bid bond will be between $10,000-$20,000. In case of a claim against your bond, the surety will offer backing up $20,000, if that is the final amount of your bond.

Unlike the other contract bonds, bid bonds don’t cost much because of the detailed and extensive check that sureties perform on contractors prior to issuing the bond. When performing this check, personal credit score is among the most important factors that sureties take into account.

DFI Insurance Can Help!

let our licensed experts help with your insurance needs!

Let our licensed experts aggressively compare and shop between our numerous top carriers to ensure we get exactly the coverage you need at the most affordable rates possible. We make the process simple, fast, and reliable.


Contact Us Today!

Why DFI Insurance

35 Years of Excellent Service
At DFI Insurance, our mission begins with a belief that our existence is to serve and respect our customers. Their satisfaction is the best measure of our success. Our execution is only possible by aligning with the highest quality insurance providers available then working hard to match our customers needs directly with these providers.
Wide Selection of Carriers and Coverages
DFI Insurance has special access to top carriers that provide excellent support and low rates ensuring you are protected. DFI Insurance has coverages ranging from auto, homeowners, life insurance, commercial business insurance and more!
Personalized Service
At DFI Insurance our licensed agents get to know you and your insurance needs and we offer unbiased information since we work for you. Let our knowledgeable, experienced professionals customize an insurance solution and make sure you get the best coverage at the best rates possible!

Some Additional Business Insurance Coverages


Commercial Liability

Covers against financial loss if claims of injury or damage.


Professional Liability

Protect experts who might face unique or unusual lawsuits as a result.



Guarantees a principal’s integrity, honesty, performance and financial responsibility.


Commercial Property

Protect your building, equipment, inventory from fire or other disasters


By Industry

Recommended insurance coverage based on your specific industry


Workers Compensation

Protects employees if they sustain an injury or become ill while on the job

Contact Our Licensed Advisors Today!

Helping you and your family for over 35 years


Request a Quote

Stay Connected

Insurance Products

Cities We Serve


Copyright © 2017 DFI Insurance. All Rights Reserved.

The content of this site is descriptive only. The precise coverage offered is subject to the terms and conditions of the policies issued. Coverage may not be available in all jurisdictions or applicable in all situations.