Frequently Asked Questions About Construction Bonds and Bond Claims
When you don’t receive the wages or payment that you were contractually guaranteed for a construction project, you may have to make a claim against the construction bond in order to obtain payment. This can seem like a daunting and complex task for those not familiar with the process or terms associated with construction bond claims. At ConstructionDisputes.com, we specialize in making bond claims as easy as possible, and we’ve compiled and answered some of the most pertinent questions that those looking to make a bond claim ask here. Once you’re ready to proceed with your claim, just fill out a bond claim application and let us put our skills to work for you.
What Is a Surety Bond?
A surety bond is a contract between three parties in which the performance and responsibilities of one party (the principal) are guaranteed to a second party (the obligee) by a third party (the surety) that issued the bond.
How Does a Payment Bond Work?
A payment bond is a specific type of surety bond that ensures that all parties receive the compensation they’re owed according to terms laid out in a contract. When one party isn’t paid the agreed upon amount, they may then make a claim on the payment bond to receive payment.
What Is Surety Bond Insurance?
Surety bond insurance is a policy that can be purchased by a bond issuer. In the event of a default, bond insurance guarantees the repayment of the principal and its interest to the bondholders.
How Do You Pay for a Surety Bond?
When you purchase a surety bond, you will be required to make a payment up front to the surety bond company before it can be issued. This payment is generally a small fraction of what the bond is worth, usually somewhere between 0.5% and 10% of its total value.
How Long Do Surety Bonds Last?
The duration of surety bonds can vastly differ from one bond to the next. One bond may have an expiration date of only one year from when it was issued, and another may last two years or more.
What Does “Bonded” Mean in Construction?
To be bonded simply means that a bond has been secured to cover the construction project. Should anything go wrong or any disputes arise, it will be possible for a wronged party to take out a claim against the bond in order to receive their compensation.
How Do You Get a Bond for Construction?
Despite just how many different types of bonds are available, the process for acquiring one is almost always the same. Once a contractor has received the bonding requirements from the project owner, they will then need to get a quote and file a bond application with a surety company. The surety company’s decision will largely be determined by the contractor’s credit score.
What Is a Bond Claim in Construction?
Construction projects require that bonds be taken out to protect the financial interests of the invested parties. When one party is not paid for the labor or materials that they supplied to a project, they may then make a claim against the bond in order to receive the compensation that they’re owed.
How Do I File a Bond Claim Against a Contractor?
When you work with ConstructionDisputes.com, it’s easy to file a construction bond claim against a contractor: Just submit your claim information to us and we’ll compile your claim, notarize it, and send it to the bonding company. It only takes a few minutes on your end, and you’ll be able to use our platform to communicate directly with the bonding company and monitor the status of your claim.
What Happens When a Surety Bond Is Called?
When a surety bond is called, it is because the obligee believes the principal is not going to follow through on their contractual agreement. The obligee will then make a claim against the bond, which the surety company will investigate. If the claim is found to be valid, then the principal will have to pay the obligee the full amount. Should the principal refuse to pay, then it becomes the responsibility of the surety company.
Where Do You Get a Bond Claim Form?
Right here at ConstructionDisputes.com: Just full out our simple bond claim form and we’ll generate the proper documents for your claim.
Who Signs a Bond Claim Form?
The person submitting the bond claim form is required to sign it, and many surety companies will also require that the signature be notarized. When you submit your claim with us, we’ll notarize it and take care of sending it to the bonding company.