Bid Bonds for Texas Contractors
When a project requires bid security, Lavon Insurance helps Texas contractors get the bid bond they need to submit a qualifying bid. Apply online, or call us for help reading the bond requirements in your bid package.
What Is a Bid Bond?
A bid bond is a surety bond submitted with a construction bid. It guarantees that if you’re awarded the contract, you’ll sign it at your bid price and provide any required performance and payment bonds.
Principal
The contractor submitting the bid and obtaining the bond.
Obligee
The project owner, government agency or general contractor requiring the bond.
Surety
The surety company that issues the bond and guarantees the bidder’s obligations.
If the low bidder refuses to sign the contract or can’t provide the required bonds, the owner can make a claim on the bid bond. Under many bond forms, the claim covers the difference between that bid and the next-lowest bid, up to the bond amount. The contractor is then generally required to repay the surety.
How Much Is a Bid Bond?
The bid bond amount is set by the bid documents, usually as a percentage of your bid. Common requirements include:
| Project Type | Typical Bid Bond Amount | Source |
|---|---|---|
| Texas county projects | Up to 5% of the total contract price on public works or contracts over $100,000 | Local Gov’t Code §262.032 |
| Cities, school districts & other Texas public entities | Commonly 5% of the bid, as set in the solicitation | Bid specifications |
| Federal construction projects | At least 20% of the bid price, up to $3 million, when a bid guarantee is required | FAR 28.101-2 |
| Private commercial projects | Commonly 5% to 10% of the bid, set by the owner or general contractor | Bid documents |
What does it cost? Bid bonds are often provided at little or no cost to contractors who have an established surety relationship, since the surety expects to write the performance and payment bonds if you win. Your eligibility and any charge depend on underwriting.
Bid Bonds vs. Performance and Payment Bonds
These three bonds cover different stages of the same construction contract.
Bid Bond
Guarantees you’ll sign the contract at your bid price and provide the required follow-on bonds.
Construction Surety Bonds →Performance Bond
Guarantees to the owner that you’ll complete the work according to the contract.
Learn About Performance Bonds →Payment Bond
Guarantees that qualifying subcontractors, laborers and suppliers will be paid.
Learn About Payment Bonds →Who Needs a Bid Bond?
General Contractors
Contractors bidding on commercial, municipal, school district, infrastructure and other bonded projects.
Specialty Contractors
Electrical, plumbing, mechanical, roofing, concrete, paving and excavation contractors bidding as primes or subs.
Public Works Contractors
Contractors responding to city, county, state, school district or federal solicitations that require bid security.
New contractors may need several days of underwriting before a first bid bond can be issued. Send us the bid documents as soon as you decide to bid.
How to Get a Bid Bond
Review the Bid
Note the obligee, bid date, estimated bid amount, required bond percentage and bond form.
Apply
Apply online and provide your contractor, project and financial information.
Underwriting
The surety reviews your experience, finances, work in progress and the project.
Submit Your Bond
Once issued, include the bond with your bid by the deadline in the bid package.
Information You’ll Need
Having this ready speeds up underwriting, especially for your first bonded bid. Larger bids may also require business and personal financial statements.
Need help? Call (972) 853-8884 and we’ll walk through the bid documents with you.
- Legal business name and contact information
- Project name, location and obligee
- Bid date and estimated bid amount
- Required bond percentage or amount
- Required bond form or bid specifications
- Scope of work
- Contractor experience and completed projects
- Current work in progress
- Financial information when required
Bid Bond FAQs
What is a bid bond?
A bid bond is a surety bond submitted with a construction bid. It guarantees that if you’re awarded the contract, you’ll sign it at your bid price and provide any required performance and payment bonds.
How much is a bid bond?
The amount is set by the bid documents, usually 5% to 10% of the bid. Texas counties may require 5% on certain contracts, and federal projects that require a bid guarantee call for at least 20% of the bid price, up to $3 million.
How much does a bid bond cost?
Bid bonds are often provided at little or no cost to contractors with an established surety relationship, because the surety expects to write the performance and payment bonds if the contractor wins. Eligibility depends on underwriting.
Does every construction bid require a bid bond?
No. Requirements vary by project, owner, contracting authority and bid specifications. Check the solicitation to see whether bid security is required.
What happens if I win the bid but don’t sign the contract?
The owner can make a claim on the bid bond. Under many bond forms, the claim covers the difference between your bid and the next-lowest bid, up to the bond amount, and you are generally required to repay the surety.
Is a bid bond the same as a performance bond?
No. A bid bond applies during bidding. A performance bond is usually required after award and guarantees you’ll complete the work according to the contract.
Can I apply for a bid bond online?
Yes. You can start a bid bond application online through Lavon Insurance’s surety bond platform. Approval and documentation requirements depend on underwriting and the specific bond request.
How long does it take to get a bid bond?
Contractors with an established bonding program can often get a bid bond within a day. A first-time applicant may need several days for underwriting, so start as soon as you decide to bid.
What happens after I’m awarded the project?
Follow the award and contract documents. Most bonded projects then require performance and payment bonds, usually for the full contract amount.
Other Construction Bonds
Lien Release Bonds
Remove a mechanic’s lien from a property while the dispute proceeds against the bond.
Learn About Lien Release Bonds →Construction Surety Bonds
How bid, performance, payment and lien bonds fit together, plus Texas requirements.
Construction Surety Bonds →General Liability
Most bonded contracts also require proof of general liability insurance.
General Liability Insurance →Start Your Bid Bond Application
Apply online for your bid bond, or call us for help with your contractor surety bond needs.
Bond availability, approval, rates, limits and underwriting requirements vary by surety company, applicant and project. A bond is not issued until approved by the surety. Statutory references are general information, not legal advice.