Business Insurance

Bid, Performance & Security Bonds

Helping Your Business Meet Its Contractual Commitments

Surety bonds — bid, performance, security, and advance payment — guarantee your obligations on tenders and contracts, unlocking opportunities you'd otherwise be locked out of.

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Quick overview

A surety bond that guarantees compensation to the project owner if a bidder doesn't honour their tender. It assures the owner you can take the job at the price quoted, and it lapses if you're not awarded the tender. Required for many public and private tenders in Kenya.

Why it matters

Why Bonds Matter

Most public and private tenders in Kenya require bidders to furnish a bid bond and, once awarded, a performance bond. Without them, you simply can't bid — and a bond frees up working capital compared with a cash or bank guarantee.

The guarantee that lets you bid

A bid bond is a surety bond that guarantees compensation to the project owner if a bidder doesn't honour their tender. It is often required for construction jobs and other projects that use a bid-based selection process, and it is a legal requirement for many public and private tenders in Kenya. Its existence assures the owner that the bidder has the financial means to take on the job at the price quoted.

Also known as tender bonds

Bid bonds fall into three categories: bonds with no financial obligation (a promissory note to provide a performance bond if you win), bonds with a guarantee element (a stated amount, usually a percentage of the tender value), and bonds used to tender for the supply of goods (submitted with the tender documents, with conditions on tender validity and non-withdrawal).

Who it's for

Who this cover is for

Contractors
Construction companies
Suppliers and manufacturers
Tenderers of all sizes
Engineering firms

Cover options

Your cover options

Choose the option that matches your needs. Exact terms, limits, and extensions vary by insurer and policy.

Bid / Tender Bond

Guarantees compensation to the project owner if a bidder withdraws before the tender expires, refuses to sign after winning, or fails to provide the required performance bond.

Performance Bond

Guarantees the contractor completes the project according to the contract.

Advance Payment Bond

Protects the client's advance payment against the contractor's failure to perform.

Protection

What this cover protects against

What applies to your policy depends on the cover level you choose and any extensions added.

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Bid withdrawn early

The bidder pulls out before the tender validity period expires.

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Winner won't sign

The successful bidder refuses to accept the contract at the price quoted.

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No performance bond

The winning bidder fails to provide the performance or supply bond the tender requires.

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Work not completed

Under a performance bond, the contractor fails to finish the works to the contract.

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Advance payment at risk

Under an advance payment bond, the contractor fails to perform after being paid up front.

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Cost of re-tendering

Where the bond carries a guarantee, the amount reflects the owner's cost of calling for fresh tenders.

Key benefits

What you get with the cover

Win more tenders

Meet bond requirements for public and private tenders across Kenya.

Three types to match the tender

No-obligation promissory bonds, percentage-of-value guarantee bonds, and supply-of-goods tender bonds.

Low cost if unsuccessful

A no-obligation bid bond carries minimal risk — if you don't win, it lapses with no financial obligation.

No cash tie-up

Bonds free up working capital compared to cash or bank guarantees.

Fast issuance

Bonds arranged quickly once your documentation is in order.

Getting covered

What you'll need

To take out cover

Company registration documents
Tender / contract documents
Details of the project
Required bond type and amount
Financial / business information
Details of the contracting organisation

Requirements may vary depending on the insurer, type of cover, risk involved, and individual circumstances. Our team will advise you on the specific documents required for your policy.

Glossary

Common terms explained

Principal

The party (usually the contractor or bidder) whose performance is guaranteed.

Obligee

The party (usually the project owner) protected by the bond.

Bid / Tender Bond

A surety bond submitted with a tender, guaranteeing the bidder will honour their bid and, if awarded, provide a performance bond.

Bid Validity Period

The time a tender stays open — for example 30 or 60 days. If the bidder is not awarded the tender, the bid bond lapses at the end of this period.

Promissory Note

An undertaking that, if the tenderer wins, they will provide a performance bond. Bid bonds with no financial obligation rest only on this promise.

Performance Bond

A bond given after a contract is awarded, guaranteeing the contractor completes the work to the contract terms.

FAQ

Frequently asked questions.

The essentials on bid, performance & security bonds — what it covers, what you'll need, and how claims work. More on the FAQ page.

See all FAQs

What is a bid bond?

A bid bond guarantees compensation to the project owner if a bidder doesn't complete the project or honour their tender after winning. It assures the owner that the bidder has the financial means to take the job at the price quoted.

Are bid bonds a legal requirement?

Yes — bid bonds are required for many public and private tenders in Kenya as part of the procurement process.

What are the types of bid bonds?

Three: bonds with no financial obligation (a promissory note to provide a performance bond if you win), bonds with a guarantee element (a stated amount, usually a percentage of the tender value, reflecting the owner's cost of re-tendering), and bonds for the supply of goods (submitted with a supply tender, with conditions on tender validity and non-withdrawal).

What happens if I don't win the tender?

The bid bond lapses at the end of the tender validity period. A no-obligation bond carries no cost to you if you're unsuccessful, and you're free to take a performance bond from any company if you do win.

How much is a bid bond for?

Where the bond carries a guarantee, the amount is typically a percentage of the tender value, set to cover what the owner would spend calling for new tenders if you withdrew.

What documents are needed?

Typically your tender documents, company registration, financial statements, and contract details. Your advisor will guide you.

Flexible cover

The right bond for your contract

Bid, performance, security, and advance payment bonds each serve a different stage of a tender. Cush Insurance Agency guides you through the bond requirements and helps you identify the appropriate solution for your contract.

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