How to dispute a claim?

[missmida]

Hello!
There has been a claim put against me on my state contractors bond and I feel it is fraudulent. The bill for the claim has been paid for with the claimant. And now the bond company is asking for 40% of the bond amount in order to reinstate the bond. I feel that this claim is fraudulent and I would like to dispute it. What are my options to dispute?
Thanks.

[Admin]

As an agency, we never handle claims directly. However, the bonding company should go to bat for you against the state if they feel it is not a valid claim.

Try calling the claims department of the surety to discuss.

[beckerfirm]

This is a very complex issue. First, you must read your general agreement of indemnity (GIA) between you and the surety. The GAI may contain language that allows you to (1) post an amount sufficient to cover the surety's loss (the reserve) and, at the same time (2) demand that the surety defend the case. Second, remember, suretyship is NOT insurance, and any losses the surety incurs by virtue of having issued your bond is likely to become your burden. In other words, read your indemnity agreement carefully! Third, issues of attorney's fees and other expenses, such as construction consultant fees incurred by the surety may become a major issue. If the surety incurs these fees, they will likely try to have you indemnify them for their losses. All of this becomes a financial balancing act. Fourth, make sure that you provide the surety with documentary proof that you don't owe the money to the claimant. the surety needs that information to avoid being accused by the claimant of asserting a bad-faith defense.

Consult an attorney to get information and specific advice as to your circumstances in the state in which you are located. I practice in NYS, only and, of course, the above information should be reviewed by you with an attorney.

Larry Becker

[Admin]

Larry is absolutely correct. The indemnity agreement you signed prior to the bond issuance states that you hold the surety harmless in the event of claim, including fees for attorneys and other experts. Therefore, it is imperative you do your due diligence in providing the surety the proper information to prove it is not a legitimate claim.

I should also tell you that you will not be able to get bonded in the future if there are unpaid losses to surety. Even if it is paid, you will have a lot of explaining to do to any new bonding company you try to get paired up with. In other words, get this cleared up before it becomes a major issue.


It looks like you originally posted this 11 months ago. Any news on it all?