Belt Auction

What does bondable mean when bidding a job?

If my husband is bidding a job as an electrical contractor and the specifics say he must be bondable up to 150%. what exactly does this mean. I called our insurance company and they said it would take two days to know if we qualify after filling out an application. What exactly do they look at? We are insured with them for $1,000,000 liability. Thanks!

Public Comments

1. I'm not from the US so the meaning could be different there, but usually being 'bonded' in this context means having a 'performance bond', so that if for any reason (sickness, injury or whatever) your husband doesn't complete the job the client can hire another contractor to finish the job and claim against the insurance 'bond'. They can also claim if the contractor doesn't perform up to the specified standard. This obviously gives the client greater peace of mind than when dealing with unbonded contractors, The following link is to a company that issues such bonds, I'm not recommending them, but the website does give some good info and it never hurts to research before you buy !
2. That means, he can get a payment and performance bond, for the job. Most of the time, you need to put the bid in, with a BID BOND for that kind of job. If you don't have the bid bond with your submission, they won't consider you for the job, even if you're the low guy. What they're going to look at, is is personal financials, business financials, and job history. Basically, they're going to underwrite the size of the job (150% of whatever) and set a maximum bondable limit. They're going to check to see that he knows what he's doing, he has insurance, and he's done that kind of work before. The bond is a guarantee, that he'll do the job, and do it right, for whatever the job bid amount is for. If he doesn't, the bond is a preset penalty amount, that the obligee pretty much automatically gets. So the insurance company, before they'll give the bond, wants to make pretty darned sure that it's never going to be cashed in. If it DOES have to be cashed in, they want to make sure that your husband - or his business - has the assets to reimburse the insurance company, for the paid out amount. So they'll want to see tax returns, assets, etc. Maybe a letter of credit from his bank. It's a guarantee, not like insurance. Hope that helps.