What happens if a claim is made on my bond ?

Understanding the bond claim process

When a claim is made on your surety bond, it's crucial to understand the process and its implications. Although claims are rare when projects are well managed, it's essential to be prepared for this eventuality.

The process begins when the bond beneficiary (usually the client or owner) files a claim with the surety company. The surety company then undertakes a thorough investigation to verify the claim's validity. This often involves document gathering, interviews with the parties concerned, and a detailed analysis of the claim's circumstances.

If the claim is deemed valid, the surety company proceeds with payment to the beneficiary in accordance with the terms of the bond. This payment covers any loss or damage the beneficiary suffers due to non-compliance with contractual obligations.

It is crucial to understand that this payment is not a simple indemnity. As the bondholder, you are responsible for repaying this sum to the surety company. This repayment obligation is a fundamental feature that distinguishes surety bonds from insurance.

At Covalen, we believe in a proactive approach to minimizing the risk of claims. We work closely with our customers to identify potential problems before they escalate. In the event of a claim, our team of experts guides you through the process, seeking solutions to resolve conflicts and protect your interests. We aim to manage claims efficiently, preserve your relationship with the beneficiary, and maintain your bonding capacity for future projects.