Why Do You Want A Bid Bond?
You know that bid bonds act like guarantees that a contractor will fulfill terms of a bid that he or she put in for a project, but couldn't you just accomplish the same thing by signing a binding work contract? Not really. Bid bonds provide faster remedies and better assurance that the contractor will be able to do what he or she says. There is much less chance that you'll fall prey to a scam if you require a bid bond.
If the Contractor Runs
Businesses are much more mobile today. Burner cell phones, co-working spaces, and online connectivity allow even the smallest of businesses to maintain a very professional presence that is also easy to discard. With contractors, you need to know that the contractor will fulfill the contract, but if you end up contracting with someone unreliable, they could run off and not leave a trace behind. That would leave you unable to sue or seek any financial remedy. With a bid bond, though, if the contractor doesn't finish for some reason, you have an actual legal route that allows you to make a fast claim. Those bonds also cover you if you end up having to pay more to secure another contractor. This is a lot faster and better than just hoping the contractor sticks around.
You Know Who This Is
A great feature of bid bonds is that the surety company checks out the background of the contractor thoroughly. If that contractor can provide a bid bond, you know that the contractor is for real and is someone who knows his or her stuff. If there are any negative issues like several allegations that the contractor skipped out on jobs, that contractor won't be able to get a bond. When you see a bid bond, you know that person is coming in with a reputation for reliability.
All the Pieces Fit
In addition to that background check, the contractor's whole business basically gets inspected. A bid bond tells you that the person has the financial backing to get things done, too. So with finances and reliability in order, and a concrete claim process, bid bonds let you find contractors who won't slow you down and won't make your project go off the rails.
Don't rely on the old idea that people will honor signed contracts; if someone is planning to scam you, they aren't going to care about the contract. Always require a bid bond for the best chance of completing your project.