What happens when a Bid Bond is cashed?
The repercussions to a contractor who has a bond cashed can be harsh. A Bid Bond is not an insurance policy, but rather a surety (bond) product. In the event that Bid Bond is cashed the guarantor (bank or insurance carrier) sends the appropriate payment amount to the Principal to cover the bond obligation. However, unlike an insurance policy once payment is made from guarantor to Principal, the guarantor seeks recovery of that payment from the offending contractor. Let’s get that Clear! Contractors – Bid Bonds provide a guarantee to the Client, they do not release your business from the bid obligation. The contractor will be responsible to repay the Bank or Insurance Carrier any payments made to the Client. So don’t bid on jobs you won’t be able to perform. “If you’ve like to talk about your Insurance Risk, contact me today. We can talk about your exposure, and potential gaps in your current coverage.” Thank you, Ryan H. Please subscribe below for the RyanHanley.com Weekly Post Roundup
