Bonding companies can make it difficult to pursue your claim.  You need to follow the langauge in the bond to preserve your claim.   This blog discusses what you need to prove to prevail on a bond claim and the defenses that a bonding company may raise to your claim.

First, what do you have to prove to prevail on your bond claim?

  • A payment bond for the project was executed by the general contractor and was delivered to the owner;
  • The subcontractor provided labor, services, equipment, or materials for the project that were bestowed on, used in, or consumed in the project;
  • These labor, supplies, equipment and/or materials were requested by the general contractor;
  • The subcontractor provided notice of its claim to the appropriate persons;
  •  Subcontractor has not been paid for all the labor, services, equipment, or materials it provided; and
  • The nature and extent of subcontractor’s damages.

A bonding company may challenge you at every one of these stages. The most popular defenses relate to the notice provided and the extent of your damages.

Notice Provisions

The bond on which you are making a claim will contain certain notice provisions. For example, the bond may state that you must provide notice to the owner and the bonding company before filing a claim. Bonding companies will enforce that provision to the fullest extent possible. And, courts have often time found that a claimant failed to provide adequate notice to the bonding company of the claim and the bonding company is not liable on the claim.

Extent of Damages

The bonding company, either independently or in conjunction with the general contractor, may also challenge the amount you are owed on the project. If your records are organized poorly and you don’t have a clear measure of how much you are owed on a job, a bonding company may avoid paying your claim because you were not able to prove the amount actually owed.

Bonding companies will enforce the terms of their bonds and if you don’t follow the terms, you may find yourself with a very difficult case to prove. The best approach is to read the bond and follow the claim requirements closely.