What happens if there is a claim on a surety bond
Many people that are new to needing a surety bond, contract bond, performance bond or bid bond have likely not given thought to what happens if there is a claim on a surety bond. Even those that have been buying a surety bond for years may have never had a situation where there was a claim against their surety bond. When a claim is made on a surety bond, it can be a costly and time-consuming process for all parties involved. Many performance bonds, payment bonds, maintenance bonds etc require that the owner of the company buying the bond sign a GIA (General Indemnity Agreement), the busines owner(s) and their spouse are required to sign. In the event of a claim where the surety has a loss, the GIA is there so the Surety can be made whole. The purpose of this blog post is to provide an overview of what happens if there is a claim on a surety bond and some tips on how to avoid them.
The most common reasons for a claim on a surety bond are:
1. Breach of contract
2. Payment default
3. Injury or damage caused by the principal
4. Non-compliance with government regulations
What happens if there is a claim on a surety bond
If a claim is made on a surety bond, the surety will investigate the claim and determine if the principal is responsible. If the principal is responsible, the surety will then work with the principal to resolve the claim. This can be a costly and time-consuming process for all parties involved.
To avoid making a claim on a surety bond, it is important to ensure that the principal is in compliance with all contractual obligations and government regulations. It is also important to ensure that the principal is taking all necessary safety precautions to prevent injury or damage. Finally, it is important to ensure that all payments are made on time.
If you are a principal and are concerned about the potential for a claim on your surety bond, there are steps you can take to reduce the risk. First, make sure that you are in compliance with all contractual obligations and government regulations. Second, take all necessary safety precautions to prevent injury or damage. Finally, make sure that all payments are made on time.
If you are concerned about a potential claim, there are steps you can take to reduce the risk. First, make sure that you are in compliance with all contractual obligations and government regulations. Second, make sure that the principal is in compliance with all contractual obligations and government regulations. Third, make sure that the principal is taking all necessary safety precautions to prevent injury or damage. Finally, make sure that all payments are made on time.
For more information on Contract Surety Bonds and frequently asked questions, answered please click here.
Brought to you by Seaman’s Insurance Group, your contract bond, performance bond, bid bond expert.
