Bond Claims

How do claims against surety bonds work?

A surety bond guarantees the performance of a contract or other obligation. If the principal fails to fulfill the contract or obligation, the injured party (claimant) can file a claim with the surety company, against the principal’s surety bond. If the surety deems the claim to be valid, the surety will pay the claimant reparations up to the bond amount. The principal is then responsible for the repayment of the claim amount, plus fees and expenses to the surety.

What happens if a claim is filed against my bond?

Claims are handled directly by the surety company. When a claim is filed against your bond, the surety will notify you and allow you the opportunity to resolve it. If the surety incurs no expenses, the claim can be resolved without additional fees charged to the principal. If the claim is not resolved quickly, the surety will investigate and determine whether the claim is valid.

If the claim is valid, the surety will cancel the bond and pay the claimant reparations up to the bond amount. The principal is then responsible for reimbursing the surety company for the total amount of the claim, plus any expenses incurred.

How can I avoid a claim on my bond?

To avoid claims on your bond, follow the guidelines and requirements established by the obligee for the business that you conduct. Make sure to complete the work as laid out by the terms of the contract or obligation to which the surety bond guarantees. If there is a dispute between either you and your client or you and the obligee, strive to reach a mutually accepted resolution before your client or the obligee files a claim.

Can I get a bond if I have had a claim in the past?

Having a bond claim in the past does not necessarily mean you cannot get bonded in the future. It's important to be forthcoming and honest about prior claim activity when applying for a new bond. If you have a pending claim, you will need to have the claim resolved prior to applying for a new bond with a different carrier.