No matter how long you’ve worked construction in Canada, it’s imperative to understand Canada’s bond claim process. This means understanding not just how to make a claim against a payment bond in Canada in matters of nonpayment, but when and what bonds are required for certain construction projects and the bonding requirements that must be met for filing. Knowing the ins and outs of this Canadian construction bond claims process can mean the difference between getting paid and being left with empty pockets after providing your labor and/or materials.
ConstructionDisputes.com’s unique construction document and communication management platform helps you to best manage all of the documents, notices, and deadlines needed to ensure that payment issues are resolves your in your favor.
What Does it Mean to Be Bonded in Canada?
Being bonded in Canada means that as a contractor or project owner, you have obtained the necessary surety bonds to begin a construction project. These bonds act as a sort of insurance that helps to protect invested parties against financial losses associated with certain projects.
In construction, there are several types of bonds that may be required before beginning a project. Two of the most common types of bonds that a project owner or prime contractor will need are performance bonds and labor and material payment bonds. Each one of these bonds serves a specific purpose for a construction project, and it will be up to the project owner or contractor to determine which ones are required to begin construction.
- Performance Bond: This type of bond acts as a guarantee that all work done on the project will be handled in accordance with any and all terms laid out in the construction project’s contract. These bonds are normally valued at about half of the contract’s total amount but can go up to 100%.
- Labor and Material Payment Bond: A labor and material payment bond in Canada is very similar to the standard payment bonds in the U.S. These bonds protect subcontractors, laborers, and material suppliers against nonpayment from the prime contractor or project owner. Should any of these parties go unpaid for their work/materials, they can then seek payment by taking a claim out against the bond. This bond is normally worth 50% of the contract’s value but can go as high as 100%.
How Do You Get Bonded in Canada?
Getting bonded in Canada isn’t just a smart idea for contractors: It’s a necessity. Throughout a career in construction, you may be required to obtain several different types of bonds for your projects. Fortunately, the process for acquiring these bonds is largely similar across all types. In order to get a bond, you must:
- Make sure you’re applying for the right bond. Different projects will require different bonds, so be sure to do your research and be certain you’re obtaining the appropriate ones for your project’s requirements.
- Locate a bonding company. You can purchase bonds through an insurance company or a surety company, but most tend to prefer working with a surety company due to their expertise in this area.
- Get a quote. The rates for surety bonds can vary greatly from company to company so it’s important to get quotes for a few different options in order to be sure you’re getting the best price possible.
- Select your bonding company. While it’s great to save money and you may be tempted to just choose the cheapest option, it’s also important to thoroughly review the services and coverage provided under each bond before making your choice.
- Purchase the bond. Once you’ve reviewed your options and chosen which company to go with, all that’s left is to sign the agreement and pay for the bond.
How to File a Bond Claim in Canada
Whether you’re a laborer from whom the contractor has withheld payment or a project owner who’s unhappy with a contractor’s performance, there are several reasons why one may choose to pursue a claim against a surety bond. In Canada, there are several steps that must be followed in order for your claim to be deemed valid.
- Identify the bond owner. You will need their information as well as your own in order to successfully file your claim.
- Contact the bonding company. The company that issued the bond will most likely have a claims department that you should reach out to as soon as you can. They will help you navigate the terms of the bond and figure out which steps you need to follow in order to file a claim against it.
- Follow the bonding company’s instructions. Each bonding company may have its own procedure for filing claims, so it’s important to follow the directions they provide you. Sometimes, you may only be required to submit a formal letter, while other times, you may need to furnish several documents that provide supporting evidence. Improper filing can lead to a denial of your bond claim.
- Stay in touch. Check in with the claims department regularly to ensure that the process is moving forward in a timely fashion.
- Await the results of the investigation. Once you’ve successfully filed your claim with the appropriate department, an investigation will be undertaken by the surety company and invested parties to decide whether or not your claim is valid. In many bond claim cases, the surety company will provide the bond holder with a time frame in which to remedy the situation. In matters like these, it’s only after that deadline has elapsed that the bonding company will satisfy your claim.
What Is a Proof of Claim in Canada?
A proof of claim form is often required in matters relating to bankruptcy. This form will state the labor and/or materials you provided to a project and the payment that you’re still owed for them. If you’re owed money from a party that has filed for bankruptcy, you will be required to submit a proof of claim form in order to be eligible for payment. This form and other supporting evidence will then be reviewed by a trustee who will determine the validity of your claim.
Let ConstructionDisputes.com Help With Your Canadian Bond Claim
When it comes to filing bond claims, there’s no margin for error. Missing a deadline or filing the wrong form can often lead to your claim being denied and you being left with nothing to show for your work. But don’t worry: ConstructionDisputes.com is here to help! Our streamlined process makes it simple to file your claim, and our experienced bond claim specialists can ensure that your bond claim is filed correctly and on time. We make sure that every bond claim filed through ConstructionDisputes.com is in accordance with all necessary federal, provincial, and bonding company requirements. Our users are also provided access to a wealth of online tools to make the bond claim process as simple as possible. From our online document center to claim tracking, we take the guesswork out of your claim.
Get started today with the pricing plan that’s right for you and file your first claim for free!