What Is a Surety Bond Claim?
Nov 3, 2020
What are bond claims?
Many public and private construction projects now require a contractor to obtain Surety Bonds as a form of performance security. When a party fails to pay or perform its obligations on a construction project, Surety Bonds provide an avenue for compensation. A Surety Bond is nothing more than a contract. It is usually in the form of a performance bond, letter of credit or cash put in place to ensure the performance of an obligation. In most cases, the bond forces the principal to perform as specified in the agreement. A Contractor Surety Bond is generally used to help guarantee that both sides of the contract will live up to their ends of the arrangement. Of course, it is always possible for one side or the other to pull out or fail in one way or another. If this happens, it is possible that a Surety Bond claim will occur.
Not sure what a Surety Bond is or who the principal is in a Bond? Learn the basics of, "What is a Surety Bond?"
How Do Surety Bond Claims Work?
If at any time the contractor or principal breeches the terms and conditions of the contract, the project owner can file a claim with the surety. In some cases, the project owner has the contractual right to sue the principal, surety or both.
How Do I File a Surety Bond Claim?
Most of the time, it will become the responsibility of the project owner to file the complaint. This can take place for a number of different reasons. The contractor may skip town and run off with the client’s down payment or fail to finish the project in a timely manner and ignore their calls. Also, a subcontractor or supplier, which has not been paid, may end up being forced to file a complaint against the contractor. Processes can vary from company to company, from region to region and so on; that's why, we recommend speaking with the broker who sold the Surety Bond for more information about filing a claim.
If you're looking to procure a Surety Bond or are looking for Contractor Business Insurance, our experienced team of professionals at Foxquilt can review your scenario and provide a solution tailored to your needs. At Foxquilt, we believe insurance should be simple, quick and easy. We provide smarter solutions built for your business and guidance at every step. Start a quote for your smarter Business Insurance solution today.
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