Category: Claims

ClaimsSurety Bonds

How Claims Hurt

We’ve emphasized, in previous blogs, that a contractor has control in avoiding claims.  The best way to avoid having a claim filed is to make sure that the contractor fulfills and documents all contractual obligations.  But, if the contractor is not able to fulfill the contractual obligations, a claim may be filed.  This will hurt the  reputation of the contractor in many ways. The Financial Burden of a Claim First of all, the financial burden will be evident once the contractor is found to have defaulted on the contract.  The contractor may have to pay the full amount.  They may also have to pay any legal fees associated with the claim.  A surety bond is not meant to protect the contractor. Instead it ensure the project owner that they will not lose out on money if the contractor defaults on the contract.  If the surety bond producer deems that the contractor has defaulted on the contract, they will pay the project owner.  They will then seek reimbursement from the contractor. The Risk of Ignoring Claims But what if the contractor decides not to pay the claim? They may feel they weren’t in the wrong or may not have the financial...

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By M L

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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.  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...

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By M L

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