Bid Deduct

A "bid deduct" applies to contractors working on particular building projects, which provide the ability to leave figures related to workers compensation and other insurance out of the bid they made to win the contract.

Usually, when a contractor takes a job, they need to buy insurance, in case someone gets hurt while working on the project. They factor these costs into the bid they submit for the project. When they say, "we can do this for $X" that X includes the cost of workers compensation and other insurance.

However, for some large projects, this insurance is already covered. Large projects predominantly work by having a single large company farm work out to multiple subcontractors. In these situations, the main contractor might have insurance coverage that also applies to any subcontractor they bring on. This type of coverage is called an Owner Controlled Insurance Program, or OCIP.

The bid deduct lowers the subcontractor's bids, because they don't need to include the insurance coverage. It's already baked into the cost of the overall project.