Surety Bond Claim Process

What is a surety bond claim?

A surety bond claim occurs when someone (the obligee or a damaged party) alleges that you have failed to fulfill your obligations under the bond. Claims are formal requests for compensation due to violations of contractual terms, laws, or regulations that the bond guarantees.

Am I responsible for paying bond claims?

Yes. Even if the surety company pays the claim to protect the obligee, you are ultimately responsible for reimbursing the surety for the full amount of the claim plus any legal costs and expenses incurred. This is the key difference between surety bonds and insurance.

What happens if a claim is filed against my bond?

When a claim is filed, you can expect:

Notification: You and the surety company are notified of the claim.
Investigation: The surety investigates to determine if the claim is valid.
Response: You're given the opportunity to dispute or resolve the claim.
Resolution: If valid, you must either settle with the claimant or the surety will pay on your behalf.
Reimbursement: You must reimburse the surety for any amounts paid plus costs.

What should I do if a claim is filed against my bond?

If a claim is filed:

Respond immediately. Contact the insurance carrier right away and provide your side of the story.
Provide documentation. Submit all relevant documents, contracts, communications, and evidence supporting your position.
Cooperate fully. Work with the surety's investigation and provide requested information promptly.
Consider resolution. Attempt to resolve the dispute directly with the claimant if possible.

How can I avoid claims on my bond?

To prevent claims:

Understand your obligations: Know exactly what your bond guarantees and what's required of you.
Maintain compliance: Follow all laws, regulations, and licensing requirements.
Complete work as promised: Fulfill contracts according to agreed terms and timelines.
Communicate proactively: Keep clients and stakeholders informed of project status.
Keep detailed records: Maintain thorough documentation of all work, payments, and communications.
Address issues early: Resolve disputes before they escalate to claims.
Consider additional insurance: Supplement your bond with liability insurance for comprehensive protection.

Will a claim on my bond affect my ability to get bonded in the future?

Yes. Claims on your bond can significantly impact your ability to obtain future bonds and will likely result in higher premiums. Surety companies view bond claims as indicators of risk, making it more difficult and expensive to secure bonding in the future.