A Bid Bond is a type of surety bond that guarantees a contractor will honor their bid and enter into a contract if selected for a project. It protects the project owner from financial loss if the contractor fails to fulfill their obligations after winning the bid. Typically, the bond amount is a percentage of the total bid. When a contractor submits a bid for a project, they often include a bid bond as part of their proposal. This bond assures the project owner that the contractor is serious and financially capable of completing the work. If the contractor defaults, the surety company that issued the bond compensates the project owner up to the bond amount.