How to Make a Claim on a Construction Performance Bond

As the owner on a project you thought you did the right thing by requiring your contractor to provide a performance and payment bond on your project. Now, despite all efforts to get your project back on track and have a lien free project, its time to take action against the surety. Where do you start? To make a claim on a construction performance bond, you will need to follow these steps:

1. Identify the surety company. The surety company is the entity that issued the bond. You can find the surety company’s name and contact information on the bond itself.

2. File a written claim. The claim must be in writing and must include the following information:

   • Your name and contact information
   • The name and contact information of the contractor
   • The name and contact information of the project owner
   • The contract number
   • A description of the contractor’s breach of contract
   • The amount of damages you are seeking

3. Provide supporting documentation. The surety company will need to see supporting documentation to verify your claim. This documentation may include:

   • The contract itself
   • Notices of default that you sent to the contractor
   • Photos or videos of the defective work
   • Invoices from subcontractors
   • Expert reports

4. Cooperate with the surety company’s investigation. The surety company will investigate your claim. You will need to cooperate with the investigation by providing information and documentation as requested.

5. Negotiate a settlement. The surety company may offer to settle your claim. If you agree to a settlement, you will need to sign a release agreement.

6. File a lawsuit if necessary. If you cannot reach a settlement with the surety company, you may need to file a lawsuit.

Here are some additional things to keep in mind when making a claim on a construction performance bond:

• The deadline for filing a claim may vary, so it is important to check the bond documents carefully.
• The surety company may not be liable for all of your damages.

If you have any questions about how to make a claim on a construction performance bond, you should consult with an attorney.

Construction is a task with a lot of gray, not everything is black and white. A good relationship between a contractor and the owner can go a long way to avoid conflicts.  The surety will spend time working with the contractor and obtaining the contractor’s point of view of the potential default. If the contractor is at fault, the surety is there to get your project completed and all the sub contractors and suppliers are paid. While it may not happen as quickly and as easily as say reporting an auto accident, the process will eventually work out.

Surety1.com is the premier online provider of surety bonds nationwide since 2003. If you are a contractor in need of bonding, contact the surety bond professionals at Surety1.