Steps to File a Claim on a Performance Bond

1. Review the Bond Terms

• Read the performance bond agreement carefully to understand the specific requirements for filing a claim.

• The bond will outline the obligations of the contractor, the conditions for default, and the steps to initiate a claim.

2. Gather Documentation

• Collect evidence to support the claim, including:

  • The original contract and performance bond.

  • Records of correspondence with the contractor.

  • Documentation of the contractor’s failure to perform (e.g., missed deadlines, incomplete work, or defective workmanship).

  • Proof that the Obligee fulfilled their contractual obligations.

3. Notify the Surety Company

• Contact the surety company that issued the performance bond. Provide a formal notice of default and state your intention to file a claim.

• Include all supporting documentation and follow the submission process specified in the bond.

4. Surety Investigation

• The surety will review the claim to determine its validity. This process typically involves:

  • Investigating the contractor’s performance.

  • Assessing whether the Obligee met their contractual obligations.

• The investigation period varies but typically takes 30-60 days.

5. Resolution of the Claim

• If the claim is valid, the surety will take one of the following actions:

  • Hire a New Contractor: Engage another contractor to complete the project.

  • Financial Compensation: Pay the Obligee the cost of completing the project.

  • Other Remedies: Resolve the issue based on the terms of the bond.

What Happens When a Performance Bond Is Called?

When a performance bond is called:

• The surety becomes responsible for ensuring the project is completed or compensating the project owner.

• The contractor (Principal) may still be held financially liable for the surety’s costs.

To learn more, visit How to Release a Performance Bond.

Key Considerations When Filing a Performance Bond Claim

1. Meet All Contractual Obligations

• The Obligee must ensure they have met all their responsibilities, such as providing payments or approvals, to strengthen their claim.

2. Provide Clear Evidence of Default

• Ensure your claim includes detailed and documented proof of the contractor’s failure to fulfill the contract.

3. Follow Bond Requirements

• Missing steps outlined in the bond agreement can delay or invalidate your claim.

FAQs About Performance Bond Claims

What Is a Performance Bond Claim?

A performance bond claim is a formal request for compensation or project completion due to a contractor’s default. It is filed with the surety company that issued the bond.

Who Does a Performance Bond Protect?

A performance bond protects the project owner (Obligee) from financial loss due to a contractor’s failure to meet contractual obligations.

Can You Get Your Money Back on a Performance Bond?

Performance bond premiums are typically non-refundable. However, if the bond was never submitted to the Obligee and is returned in its original form, some sureties may offer a partial refund. Learn more at How to Be Released from a Performance Bond.

Why Are Performance Bonds Necessary?

Performance bonds provide essential financial security for project owners by:

• Ensuring contractors complete their work as agreed.

• Offering a safety net in case of default.

• Holding contractors accountable for delays, defects, or non-performance.

For a deeper understanding of performance bonds, visit What Is a Performance Bond?.

Related Resources

For more guidance on performance bonds and claims, explore the following topics:

• How to Complete a Public Performance Bond Form

• Performance Bond Costs

• What Triggers a Performance Bond?

• Construction Bonds Overview

Final Thoughts

Filing a claim on a performance bond can seem daunting, but by following the steps outlined above, you can ensure a smooth process. From gathering documentation to working with the surety company, attention to detail is key to filing a valid claim.

If you need assistance with performance bonds, claims, or other contract surety bonding needs, contact Swiftbonds today for expert advice and support.

Visit Swiftbonds Performance Bonds for more information or reach out to our team to discuss your specific project needs.