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Surety Bonds

Surety Bond Claims

by Michael O'Brien

There are three parties involved in surety bonds and surety bond claims. The owner, or obligee, is the person or party requiring construction. The contractor or principal is the person or party providing construction. The surety is the entity which becomes responsible to the obligee for the work of the principal.

When Claims Are Filed

Surety bond claims occur when projects go wrong. Let's say the weekend is coming up and you're unhappy with the progress of construction. On top of that, the electricians decide to walk off the job because they haven't been paid by construction. When enough things go wrong, it may be time to declare the construction company in default, or having failed in their contractual obligations.

No one expects such problems on construction, but it's best to be prepared for them. That's why surety bonds exist. Owners bond their projects so they are protected if such things go wrong.

What Happens in Surety Bond Claims

When surety bond claims are filed, companies send in claims investigators. This is to find out who is at fault. They review the contract and obligations of both parties. If the contractor is found to be at fault, the surety company will pay all liabilities and find another contractor to finish the work.

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