251-217-9733
Fidelity, Surety & Construction Bond Claims
When the contract fails, the bond is what is left. Making a claim on it is its own discipline.
What a Bond Actually Does
A surety bond is a three-party guarantee. The surety promises the project owner, or the parties supplying the project, that if the contractor fails to perform or fails to pay, the surety will make it right, and the contractor separately promises to indemnify the surety for anything it pays out.
That third relationship is what catches contractors out. A surety that pays a claim will usually look to the contractor and its indemnitors to recover, and those indemnity agreements are typically signed years earlier, often personally, and are considerably broader than people remember.
Bond claims also run on their own notice requirements and deadlines, which are separate from any lien rights and unforgiving when missed.
What We Handle
Payment bond claims
For subcontractors and suppliers who have not been paid on a bonded project.
Performance bond claims
For owners where a contractor has defaulted, including takeover and completion issues.
Bid bond disputes
Where a bid is withdrawn or a contract is not executed.
Fidelity bonds
Claims arising from employee dishonesty and loss.
Surety indemnity
Claims by sureties against contractors and their indemnitors, and defense of those claims.
Defense of bond claims
Representing contractors and sureties against claims that overstate what is owed.
Sound familiar?
Payment Bond or Performance Bond?
Both are issued on the same project and they do entirely different jobs.
Protects those who supply labor and materials
Protects the project owner
Claimed by subcontractors and suppliers who have not been paid
Claimed by the owner when the contractor fails to perform
The failure is non-payment
The failure is non-performance or abandonment
Remedy is payment of what is owed
Remedy is completion of the work, or the cost of completing it
Who does this work
Jordan W Gerheim
Construction litigation and surety work, and author of "The Surety's Contractual Right of Indemnity," presented at the Southern Surety & Fidelity Claims Conference.
Benjamin N. Kearns
Construction and contract litigation, including claims involving multiple parties on a single project.
Cost and related pages
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Frequently Asked Questions
We have not been paid on a bonded project. What do we do?
Establish immediately whether the project is bonded and obtain a copy of the bond, then calendar the notice requirements. They are short, they are strict, and they run separately from any lien rights you may have. Pursuing a lien while missing the bond notice, or the reverse, is one of the more common ways a valid claim is lost on procedure rather than on merit.
I signed a general indemnity agreement years ago. How exposed am I?
Frequently more than you expect. General indemnity agreements are typically broad, often include personal and spousal indemnity, and cover the surety's losses, costs, and legal fees. They are also usually signed at the start of a relationship when nobody expects a claim. If a surety has made demand, have the agreement reviewed before you respond to it.
The contractor defaulted. Should we declare default under the performance bond?
Carefully, and usually with advice first. Declaring default triggers obligations and processes under the bond, and doing it improperly (or prematurely) can compromise the owner's own position. There is often a sequence the bond requires, and following it is what preserves the claim.
What is a fidelity bond?
It covers loss caused by employee dishonesty rather than by construction failure (theft, embezzlement, and similar). It is a different instrument from a construction surety bond, though claims on it raise comparable questions about notice, proof of loss, and the scope of what is covered.
Related Insights
The Notice Deadlines Are Shorter Than You Think
Call 251-217-9733 or book a Risk-Free Strategy Session today. Send us the bond and the contract and we will read them first.