Surety Bond Claim Process – Facts & Tips

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  • Surety Bond Claim Process – Facts & Tips

It is important to know how to avoid claims in order to protect your business. Therefore, in order to avoid claims, especially false claims, it is important to work with a surety bond producer who is knowledgeable and competent. 

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To review, a claim is when a client makes a formal accusation against due to their assertion of a violation of the contract.  In order to avoid claims, you need to be certain, first, that you fulfill your contractual obligations.  But, unfortunately, even if you fulfill your contractual obligations, it doesn’t mean you are safe against a false claim.  Working with a surety bond producer who will protect you can be a comforting feeling during a stressful false claim.

A surety bond, although necessary, doesn’t protect you from claims.  Instead, it protects the public from you not fulfilling your contractual obligations.  In order to avoid claims, it is important to follow government rules, fulfill all contractual agreements, document everything. As always, if a dispute arises, try to resolve it with the complainant first.

If a claim is filed, both sides will argue their case in front of the bonding company.  If the bonding company agrees in your favor, they will help you fight it.  But, if they believe that you have not followed government rules or fulfilled your contractual obligations, they will pay out the claim and seek reimbursement from you.

Therefore, it is of the utmost importance for your business to choose a surety bond producer who has a proven history of customer service and loyalty.  A great surety bond producer will:

  • Make sure you understand the suretyship and potential claim liabilities
  • Explain surety bond benefits.
  • Explain the indemnity agreement’s purpose.
  • Reinforce ways to avoid claims
  • Be able to explain legal language in layman’s terms

It is important for you to assess if your surety bond producer is looking for a quick sale or they actually care about your business.  We at Surety Bond Professionals pride ourselves on our excellent customer service, decades of experience in the field and customer loyalty.  Let us be in your corner and work with you when applying for your surety bond.

In Summary:

  • Surety bonds are not meant to protect you.  Instead, they protect the general public from you defaulting on your contractual agreement.
  • In the case that a claim is filed, both sides will be able to argue their case to the surety bond company.
  • If found in your favor, the surety bond company will fight for you. If found against you, they will pay and seek reimbursement from you.
  • It is important to have a surety bond producer in your corner who can explain the different terms and legalities.   Also, they will make sure that you understand the ramifications of not fulfilling your contractual obligations and following government rules.