If you’re a contractor, subcontractor, or supplier in the construction industry, understanding bond claims is essential for protecting your rights and ensuring fair compensation. In this post, we demystify the bond claim process and highlight what you need to know to navigate it confidently.
What Are Construction Bond Claims?
Bond claims serve as financial protection on construction projects, particularly public works. When contractors fail to pay subcontractors or complete the work, bond claims ensure funds are available to cover losses and complete the project.
Public works projects—like roads, bridges, and schools—often require contractors to secure construction bonds. These bonds guarantee that subcontractors and suppliers will be paid, even if the general contractor defaults. For more details on lien rights in public and private construction, see our liens and litigation overview.
Construction Bonds Explained
A construction bond is a type of surety bond typically required for public construction projects—and is distinct from construction liens. It protects the project owner and other parties by ensuring the contractor meets contractual obligations and pays subcontractors, suppliers, and laborers.
There are several types of construction bonds, including:
- Performance Bonds: Guarantee project completion
- Payment Bonds: Ensure payment to subcontractors and suppliers
- Bid Bonds: Secure the bidding process
Using these bonds, public agencies can minimize delays, mitigate financial risk, and promote trust among project stakeholders.
Public vs. Private Construction Bond Claims
While both public and private projects may use construction bonds, the claims process differs. Public works claims often involve stricter deadlines and more documentation. For example, claimants must typically notify the public entity within a specific timeframe. Missing this deadline can result in a denial of payment.
Private construction bond claims are generally less complex, but understanding the nuances of each type is essential for protecting your interests.
Filing a Bond Claim: Requirements and Best Practices
To file a successful bond claim, contractors should:
- Know the deadlines: Each state has specific timelines for notice and filing.
- Maintain documentation: Invoices, contracts, and communication records are key.
- Send timely notice: Alert the appropriate public agency or bonding company.
Keeping thorough records throughout the project makes this process smoother and strengthens your claim.
Common Mistakes to Avoid When Filing a Bond Claim
Avoid these pitfalls to increase your chances of a successful bond claim:
- Missing deadlines: Late notice or filing can invalidate your claim.
- Inadequate documentation: Lack of supporting evidence weakens your case.
- Incorrect party notification: Sending notice to the wrong party may delay the process.
- Assuming private and public claims are the same: Understand the distinct procedures for each.
- Waiting too long to act: Prompt action is critical to preserving your rights.
What Damages Do Bonds Cover?
Construction bonds can cover various types of damages, including:
| Damage Type | Description |
| Structural Damages | Cracks, collapses, or foundation issues caused by poor construction or failure |
| Environmental Issues | Pollution or contamination from construction activities |
| Mechanical Failures | Equipment breakdowns that delay or impact project progress |
These protections help ensure the longevity and safety of public infrastructure while giving peace of mind to all stakeholders.
Strategies for Successful Bond Claims
To improve your chances of a successful claim:
- Understand the process: Know the rules, deadlines, and requirements
- Document everything: Keep records of agreements, deliveries, and correspondence
- Foster good communication: Strong relationships with project owners and general contractors can facilitate smoother resolutions
Effective collaboration and preparation can make all the difference when it comes to securing payment.
Navigating construction bond claims doesn’t have to be overwhelming. Lienguard specializes in helping contractors, subcontractors, and suppliers manage and file claims with confidence. Contact us today to ensure your rights are protected and your business gets paid.