The Surety Bond Claims Process

Surety bond claims are as widely varied as the myriad bond forms, obligations, jurisdictions, parties and fact patterns one can imagine. They can be as simple as a parking ticket or as complex as the college football rankings or this year’s delegate counts

The process ultimately self-adjusts according to the individual case, but this entry should provide some general help and basic orientation. The most important aspects involve communications: immediate, concise, thorough and frequent contact with surety claims personnel; the complete disclosure of information; and continuous, real-time status updates. Surety claims persons are expected and required to treat all parties fairly, ethically, thoroughly and within legally prescribed time frames and in a courteous, professional manner. Give them all the information they request, in addition to what you would like them to have, and do it as soon as possible. Never be afraid to ask questions throughout the process. Like you many, if not most surety claims professionals had never heard of this obscure subject matter until shortly before they got involved with it. So, they are typically tolerant of what you may feel are “stupid” questions.

Search the Internet for situations similar to your own. Talk to your peers to the extent possible. Browse and ask questions here, you may find an answer if you seek only basic information. Oftentimes, the bond obligee, agent, broker or underwriter can help as well, especially with finding the correct claims contact at the surety. If a statutory bond is involved, often the governmental entity requiring the bond can assist.

Learn About Bond Claims

Why You Need To Avoid Claims At All Costs [Video]

Depending on the ramifications of the outcome of the claim, you may need to obtain highly-specialized surety claims experts, e.g., legal, accounting or construction consultants. This may not be the time for old buddy who went to law school, but to get on the search engines. Most find that this is money well spent. Look at it this way: Four Minute Oil Change is not the place for the 90,000 mile tune-up, no matter how well-intentioned. Sometimes, you have to go back to the dealer, who put the thing together. If you are facing a tough situation, you should be aware that others involved may consider it routine. Prepare accordingly.

There is a fair amount of printed matter available on the law of surety claims, but much of it concerns complex construction and is prepared for the benefit of the surety itself. These books tend to be weighty tomes, nationwide in scope, written by and for specialists. But they may also be very helpful orienting the layperson and should not be overlooked. Despite the fact these are law books mostly written by surety attorneys, these
American Bar Association (ABA) publications – scroll down to “Fidelity and Surety Law” may be worth your while.

If your surety claim involves highly technical construction issues, in addition to legal ones, you will have to search accordingly. For example, often construction contract surety claims may involve liquidated damages (LD) due to delays. Books like: Construction Scheduling: Preparation, Liability and Claims by Wickwire et al, Guide to Construction Contract Surety Claims Schwartzkopf et al., are excellent points of reference. Internet searches within bookseller sites of may yield similar titles.

Unfortunately, surety bond claims happen. Typically, they are not painless, nor are they insurmountable. The above resources can give some guidance and a rough template of how to proceed.

Guest Author: Surety Insider, LLC


Eric is the Webmaster of JW Surety Bonds. With years of experience in the surety industry, he is also a contributing author to the surety bond blog.

46 Comments

Fernando

We are a trucking company who has offered our services to various brokers. A few of them have failed to pay for our services, but have been paid by there clients. These brokers, who have failed to pay us or refused to pay us, have closed previous business and opened new business or are out of business. Since they have failed to pay but have been paid can we go after the shipper or consignee who received the benefit or our services, even if they have paid the broker who failed to pay us??

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Michael Weisbrot

Fernando,

Contact the Federal Motor Carrier Safety Administration. They would have either a BMC-84 surety bond or a BMC-85 trust fund in place that will allow you to recoup up to $10K.

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suzy martin

I was a an elevaor subcontractor hired by another elevator company to install an elevator at a navel base. The general contractor was making payment to the the elevator company that contracted with us. We never received any payment because the elevator company went out of business. I contacted the surety bond company and I was informed that I did not file the bond within the 90 days. The company that filed the lien informed me that I have 180 to file the claim against the bond. Can you please advise. An intend to file a lien letter was send after 2 1/2 months from the last day of work. However the lien was received 3 days after the 90 days. Who is right, the lien company or the surety bond company. Please advise.

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Michael Weisbrot

Suzy,

As a surety bond agency we don't handle much in terms of claims. That responsiblity is done by the carrier. Therefore, I don't have much to offer you in terms of advice.

However, since there is a discrepency as to whether or not the bond covers your work at this point, I would contact an attorney that can assist before you get stuck with the bill.

Sorry I couldn't assist more!

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Eric Weisbrot

Mamie,

Yes, background checks are not a part of our surety bond application process.

However, background checks may be required by who ever is requiring the bond of you. Is anyone requiring a bond of you? If so, who?

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Seegie

Is this right?? A homeowner terminated a licensed contractor to build a pool. He then hired an unlicensed contractor to finish the contract. After the work was completed, the homeowner then filed a claim on the licensed contractor's bond. The surety company paid the claim. Can the surety pay a claim when the work was done by unlicensed contractor's. Is this worh fighting?

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Eric Weisbrot

Seegie,

It sounds like something is missing from the story, as the surety would not pay a claim triggered by faulty work of an unlicensed contractor.

Could you provide more information so I can assist further?

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Seegie

The Surety company sent a letter to the home owner every month for 6 mo. requesting copies of contracts, invoices, licences of the contractor's and copy of the checks. The homeowner sent only copy of the checks paid. The surety company then sent a consultant to evaluate the project. When the consultant sent his report to the Surety Company they then paid the claim to the home owner. The surety is now suing for their losses. The report only states what the homeowner had paid to complete the project.

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Seegie

I guess I'm wondering if it is legal for a Surety Company to pay a claim when the work was completed by unlicensed contractors? The homeowner claimed abandonment, but he actually terminated the licensed contractor. And the Surety Company has this information. This situation is very confusing and exhausting for my family.

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Eric Weisbrot

Seegie,

Unfortunately, I can't offer legal information, as it's outside our realm of knowledge. It may be best for you to contact an attorney to determine your next steps.

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Michael

Hi Eric. Thanks for the website and wonderful videos you have on it.

I have a question. How do I make a claim against notary surety bond? The document transferring my mortgage from one lender to another was improperly notarized, signature forged, and there is no record of this notarization in the notary's record book. This invalid notarization created a problem with the chain of title and affected marketability of the title and property. How do I make a claim? Thanks.

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Eric Weisbrot

Hey Michael,

You'll need to contact the surety company who wrote the bond to make a claim.

Let me know if you have any other questions.

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Dalu Li

Hey Michael,
Maryland Insurance Administration sent me a letter and told me to file a claim against Surety Bond No. 70011484.
The address they gave me was:
Western Surety Company
Attn: Claims Dept
333 S. Wabash Avenue
Chicago, IL 60604-4107
Is this the right place to file a claim? If not where, can you tell me?
Thank you very much.
Dalu

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Eric Weisbrot

Hey Dalu,

Yes, you will want to contact the Western Surety Company claims department and file the claim with them. Their number is 800-262-2000.

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Amy

I am getting ready to file a claim with the surety bond company against a used auto dealership for odometer fraud. I will also include failure to provide me with title and registration within 60 days of purchase. (I bought the truck 7 months ago paid cash for it and I still do not have the title.) I am also filing a claim in civil court for federal and state law violations asking for all punitive damages I am legally entitled to in addition to my actual damages. DMV is conducting their investigation on the business and the criminal side of the fraud.

My question is in the claim I am getting ready to file with the bond company should I include everything I filed for in the small claims court? Would the bond company be able to award me the treble damages I could receive for violating the Federal Statue laws if the judge in small claims court rules in my favor? Are these questions Western Surety will be able to answer for me? I do not want to short myself in any way in my claim to Western Surety Co… from what I know so far in DMV's investigation things are not looking too good for this auto dealership. Oh, by the way, my truck's odometer was apparently rolled back 140,000 miles! The truck is worth nothing now.

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Eric Weisbrot

Hey Amy,

Sorry to hear about all of your trouble.

Yes, you'll want to include everything that you have filed in small claims court to strengthen your case. You'll need to contact Western Surety's claims department and they will help you with the claim process.

Let me know if you have any other questions.

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Patrick

A municipality is opening bids for bids shortly where they will choose a contractor to horizontal drill a 20 inch line within feet of historic houses. I don't think they've considered the fragile nature of old buildings in spite of a "proper" Section 106 review. My small company restores/develops these historic buildings for light commercial use. If there is damage to my old building, can I, how do I, and what bond am I looking at to file a claim against if there is damage to the old structures?

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Eric Weisbrot

Hey Patrick,

The bond guarantees the performance of a contract. It will not protect outside properties from damage. Your best bet is to discuss this element with your insurance carrier.

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Mike

Hello
I'm trying to find the name of a new car dealer's (located in California) bond company and have had no luck in doing so.
I have found on the dmv website their license info but nothing else.
Any ideas were to look?
Thanks

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Mike

in CA, i purchased a car 12/24/2014 Dealer didn't Transfer title or reg or pay CA DMV, WE paid Cash, Car is still UNREGISTERED, Temp dropped,,Insurance dropped it,, called surity in July, Got written Claim forms in August after My Fourth call, Wriien response received by them and Acknowledged August 18th… no response. I called, They hired an Attorney,,How long do they have to respond or are they waiting until the Year is up for me to File??

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amy

Look up CA Vehicle Code 5753. He will have to pay you money for not transferring ownership in the time allowed. Since you paid cash for the car, the dealership only has 15 days to transfer to you. Take him to small claims court!

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cdideb

we have a claim on a bond with a contract. The contractor claims he was paid $.48 on the dollar and is only willing to pay us the same. The cause has nothing to do with our inside work but work on the outside of the building. My question is should we take the offer or try to get Liberty Mutual to pay in full? I heard that is the contract states that "you get paid when we get paid" that the bond company wont pay, is this true? Any help is appreciated as the bond company won't return our calls and the first one we talked to said he works for the contractor not us.

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Eric Weisbrot

Hello,

You should have an attorney that is well versed in construction contract law take a look at your sub-contract. You should advise him/her of all surrounding circumstances and documentation you have received to date from the ultimate owner and the GC as well. While it is true that many sub contracts have a “pay when paid” clause, you should seek legal counsel’s advise to ensure your rights are protected to the fullest extent of the law.

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Lisa

I have finally got a Judges ruling that my name was indeed forged on my house and have now got it back in my name free and clear again. But it has taken over three years in court to get the ruling in my favor. My question is this, I contacted the bonding company and opened a claim with them over two years ago and since the judge's ruling, the bonding company has not been communicating at all. No reply to my emails and no return of phone calls. there has been only one communication with them stating they received my email with the ruling and would be in contact shortly. That was over a month ago. Is there a time frame they must adhere to in paying the claim? Who do I contact to report their refusal to communicate with me regarding my claim?

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Eric Weisbrot

Hey Lisa,

It would be your best bet to ask your legal counsel for advice. However, if you're not getting anywhere with the insurance company I would highly recommend that you make a complaint to the Department of Insurance with in that state. When a consumer files a complaint to the Department of Insurance they get on the insurance carriers very quickly and require a response.

Good luck!

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Lisa

The claim is to recover my attorney fees which ran over 15,000.00 and in Missouri the bond is capped at 10,000.00. But with their refusal to communicate with me on my claim, I do not know where else to turn for help. Please advise.

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Eric Weisbrot

Hey Lisa,

My previous advice still stands. Please contact the Department of Insurance and explain your situation. I hope this issue gets resolved for you!

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Kmoloney

How do I find out which surety company issued the bond for a particular notary? Must I ask him directly , or is there another way?

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Alena

I filled a surety claim and its been 2 month and I am still waiting to get my money. Can you please tell me how long this process takes? Thank you

Reply
Eric Weisbrot

Hey Alena,

I didn't see that you posted twice…sorry about that. If you're not getting a response from the surety, you'll have to contact the Department of Insurance in your state.

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Alena

Hello!!!
Can you please tell me where to file a complaint against surety bond company besides small claim court. Thank you

Reply
Eric Weisbrot

Hey Alena,

If you're filing a claim against the person who has the bond, you'll need to contact the surety company who wrote the bond to file the claim.

If you want to file a complaint about a surety, you'll have to contact the Department of Insurance in your state.

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Alena

Thank you Eric for your quick respond . One more question please, how long surety bond can take to process payment for a claimant? I filled 2 month ago. Thank you.

Reply
Eric Weisbrot

Hey Alena,

The time it takes will vary by the surety company. Unfortunately, I can't give you an accurate time frame; that's something you'd need to talk to the surety about.

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daniel

i submitted a claim to my contractor's bond co. for the total amount on their policy, right from the start they told that they already paid some other claims for the year and the most i will be able to get is the rest of it, is this correct?

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Eric Weisbrot

Hey Daniel,

You can make a claim against the full amount of the bond. However, you can only make a claim for what you're owed monetarily and would have to show proof of what is owed.

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Holly

Hello,I have been demanding my court bid bonds throughout a district attorney's office,I am the principle and secured party holder in due course also.there refusing to give them to me to counter claim ,or discharge or protest ect.these bonds were taken out over a year ago they defaulted before they took them out.does anyone know? First they denied knowing there existence even my own paid attorney lied until I explained about the little millers act and the process these bid bonds go through,than my attorney said they don't need them which there full of it without them they have no claim.why is it such a secret? Do they not want the averge Jane doe to know there putting humans on on the stock market and cashing in with the federal reserve money?in fact we been in debt and sold off to England for large sums.these court bid bonds are very profitable market.they call it construction projects on subjects and the market calls humans a mortgage .they bid bonds have penal sums attact to them the bonds gets underwrited by a third party.what I have experienced I now understand there's got to be a lot of innocent humans in prison I was railroaded right after I caught the attorney general office and questioned a retired congressman of returning money back into a program he profits from and help create pa.i have to get these bonds if anyone know what I am talking about I need help there not cashing in on my human body because there corrupt.

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Edward

I have a question about filing a lien against a companies surety bond. As short as possible my semi was hit. There was $15000.00 in damage. Their fault. Their insurance wouldn't cover all the cost they underbid the appraisal by like $5000.00 So i had to file the claim on my insurance to get it completely fixed. NOW…. I have a running daily total for downtime. "My truck is still being fixed." Going on 3 months now. When the truck is finished and I have the total days it was down I will have a Grand Total that I will request from the insurance company. She already tried to give me a 1/3rd of what is outstanding at the moment. I told her why are you offering me anything the truck is still being repaired. Downtime stops when the truck is finished being repaired and ready for pickup. I have a feeling they are going to do the same and underbid me. So I want to know can I file a lien against their surety bond because I do not want this dragged out for months. I want and need my downtime money.

Thank you,
Edward H. Bruner
R&E Logistics LLC

Reply
Eric Weisbrot

Hey Edward,

This is 100% an insurance issue and isn't related to surety bonds. The bond covers carrier payments and guarantees booked deliveries. I would keep fighting the insurance company, as any claim would be declined against the bond.

Reply

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