Filing a bond claim is an effective way to get paid on a state, county or federal construction project, but it’s very common for things to get very quiet after a bond claim. What is going on? When can you expect to get paid? And is there anything you can do to push your claim along? Here is a guide on what you can expect and what you should do after filing a bond claim.
Step 1: Send A Copy Of Your Bond Claim To Everyone, Especially The Surety
Depending on the type of project subject to your claim, there are requirements as to who must receive your bond claim. Of course you should comply with these requirements, but don’t stop there. Send a copy of your bond claim to absolutely everyone who is interested in the project and who may be affected by the claim.
This means the public entity commissioning the work, the prime contractor, the contractor who hired you, the construction manager and the surety should get a copy of your claim.
Aside from the required recipients, the most important on this list is the surety (and sometimes, but only rarely, they are on the required list too). Why? We wrote an entire article about why: Send Your Claim To The Surety To Ensure Maximum Attention.
Step 2: Wait. When You Receive Surety Response, Promptly Reply
The next step is to “wait?” Unfortunately, yes.
Once your bond claim is sent off, you are essentially waiting for the bonding company to receive the claim, formally open your claim, and then send you a responsive letter requesting backup information. The surety will also likely ask you to fill out a form sworn statement and return that as well. This typically takes between 14-30 days from when you send off your bond claim.
So, use the waiting time to get all of your backup materials ready. Pull together contracts, work orders, purchase orders, change orders, invoices, emails, lien waivers, proofs of previous payments, photographs of your work, time sheets, etc. Get together absolutely everything that relates to the project and your claim, and organize it.
When you receive the surety’s reply, respond quickly by sending all of this backup information and the sworn statement.
Step 3: Followup with the Surety’s Representative. Do It Again. And Again.
When the surety contacts you by letter, you will be contacted by a specific representative who has been assigned your claim. Make note of this representative’s name and contact information.
After you’ve sent back your backup materials and sworn statement, contact this representative to confirm it was received. If he confirms it by telephone, make a record by sending him a confirmation email or letter.
Then, set reminders to keep following up with this contact once every week or two. Each state has rules for how long a surety can take to process your claim, but it is usually somewhere between 30-60 days from receipt of your materials. As the days turn to weeks, contact the representative more aggressively.
You’ll want to accomplish two things when contacting the surety:
- Keeping your claim at the top of his mind;
- Being there to quickly resolve any little issue that comes up to delay your claim.
Step 4: Escalate The Pressure with Collections / Lawsuit
If the above three steps do not proceed smoothly or timely, you may need to escalate the situation. To do this, submit your item to collections.
Some folks think poorly of collection agencies, but that’s because they’ve worked with the wrong ones. That’s the only explanation I can find, as a quality collections partner will help your company collect debt instead of writing it off, and without the necessity of incurring expensive attorney fees.
Moving your claim into collections escalates the situation. If that doesn’t work, or if you’re hell bent on skipping a collections process, the next step is to file a lawsuit to enforce your claim against the bond.
You’ll need to hire an attorney to file your bond claim enforcement action, and you want to make sure you do that before your deadline.
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