Businesses can take advantage of bid bonds insurance to help them to grow by leveraging other stakeholders’ resources. In fact, bid bond insurance has helped businesses in a number of industries. To learn more, call the team at American Insure-All today for bid bonds insurance broker in Mercer Island.
What is Bid Bond Insurance?
A bond is a type of agreement that businesses, partners or even two separate entities can enter together to work together on behalf of the business(s). This could also serve as a contract for the exchange of goods and/ or services or profits.
In short, businesses can secure bid bond insurance, and its variations, to “borrow” an investor or stakeholder’s resources in order to help grow the business. This works similarly to a loan. Bid bond insurance protects the investor or stakeholder from the bond issuer defaulting on scheduled principal and interest payments. Even if a business defaults on payments, the other investor or entity is protected by bid bond insurance. Each bond issuer’s credit is considered before bid bond insurance is provided in order to determine the overall credit risk associated with the bond issuer.
In another example, bid bond insurance can also serve as a protection vehicle in the construction industry. This type of bid bond insurance is also known as contract performance bonds. For example, a contractor and developer might enter an agreement to work together on a project, including the construction of an apartment complex, condominium complex, or another type of project. The contractor submits a bid to the developer for the total proposed cost of the project. The developer wants to protect him or herself against a contractor increasing or altering the quote after the bidding process. In order to do this, the developer and contractor will enter an agreement in which bid bond insurance is purchased to serve as a layer of protection for both entities.
For more information on the different types of bond insurance, call American Insure-All today at (888)411-AUTO to learn more about working with a bid bonds insurance broker in Mercer Island.