Policy snapshot
A bond that guarantees the bidder will honor their bid and sign the contract if awarded.
What is Bid Bond?
Bid Bonds guarantee that a contractor who wins a bid will enter into the contract and provide required performance security. It protects the project owner from wasted selection processes.
What can it cover?
- If the contractor fails to accept the contract or withdraws their bid after selection, the insurer compensates the obligee (project owner) for losses up to the bond limit. This ensures only serious and capable bidders participate in tenders.
Who should consider it?
- Civil and infrastructure contractors, EPC companies participating in government and PSU tenders, MSMEs and mid-size contractors seeking BG alternatives.
Key features to understand
- Submitted with the tender application
- Protects against frivolous or unserious bidders
- Typically 2–5% of the bid value
- Valid until contract award or withdrawal of bid
What deserves attention before you buy?
Coverage, exclusions, sub-limits, deductibles, waiting periods, warranties and underwriting can vary between insurers and policy versions. The policy wording and schedule remain the definitive contract. Novo can help you review the relevant terms for your requirement.
Read the wording, not just the brochure
The schedule and policy wording determine the actual contract.
Compare meaningful differences
Look at exclusions, limits, deductibles, conditions and claim requirements—not premium alone.
Think beyond purchase
Servicing and claims-related support can matter as much as placement.