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Breaking Down Bid Bonds

You have received the invitation to bid, and it is the perfect job for your organization. It is exactly what you specialize in, and it is in your backyard. You have got this one in the bag! Then you see it…the bid bond requirement. You have never bid a job that has a bonding requirement, what now? You think of all the information and paperwork you will need to dig out. Maybe you should just skip this one, there will be more.

Does this sound familiar?  If so, allow us to calm your concerns, answer your questions, and educate you in the art of bonding.  Instead of giving up that perfect job, you will be able to start putting together your bid without worry.

You may be wondering, what is a bond? It is important to know that a bond is not an insurance policy.  A bond is a financial guarantee given to the owner of a job or project stating that your business is financially capable of taking on that job which you have decided to bid on.  Should the bonded business be unable to complete the job, the bonding company would pay out to the job owner but, unlike insurance, your business would then be responsible to pay the bonding company back. The bond allows the job owner to be confident in the contractors or subcontractors hired to complete work on their site.

The second thing you should know is that bonds can be required in any type of industry for a variety of reasons. Contractors, manufacturers, brewers and distilleries, janitorial services, third party administrators, car dealers and inspection stations, notaries and insurance agencies are just some of the entities that are required to obtain bonds.  Fortunately, HMK has over 35 years combined experience in issuing every type of bond and is able to guide you through the entire process.   We regularly issue site improvement bonds, contract bonds, court bonds, malt & brewed beverage bonds, hauling bonds, and notary bonds.

As of May 1st, construction will reopen in Pennsylvania.  For contractors, it can be overwhelming to try and determine what information will be needed when you call your insurance agent requesting a bond.  The good news is you will not need to do any of the information gathering leg work on your own. Contact HMK Insurance when you are ready to start looking at bonded opportunities. You may be pleasantly surprised to know that you can generally obtain a $500,000 bond line without any financial reports. Most of those bonds will rely solely on personal credit. Hitting a mark slightly higher than $500k? Do not panic! Our HMK bond team will outline exactly what is required to get the ball rolling. Other bonds (site improvement bonds, court bonds, malt & brewed beverage bonds, hauling bonds, notary bonds, etc.) generally only require a one-page application. It does not get much easier than that!

Do not allow your business to miss out on lucrative work opportunities because of a bid bond contract requirement.  Bond professionals, like those at HMK Insurance, have the ability to make the process painless and can quickly turn around results for you to meet your deadline. During the COVID-19 pandemic all of HMK’s services, including the issuing of bonds, have remained operational and responsive.  We are here to help your business succeed.

Lora Guinn, Account Executive, Bonding Agent & Notary Public for the Commonwealth of PA

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