Prior notice now required for Indiana payment surety bond claims

Prior notice is now required for Indiana payment surety bond claims

As of July 1, 2012, Indiana requires that anyone planning to file a claim against a payment surety bond must provide notice. This requirement also pertains to claims against amounts retained for public works projects.

Indiana HB 1163 — which was signed by Gov. Mitch Daniels on March 15, 2012 — changed the previous regulation requiring the Public Works Division to submit a claim within 60 days of providing the final labor, service or materials for the project at hand. Additionally, the new law reduces the amount of money that can be retained upon the substantial completion of the project. With a reduction from 400% to 200%, the goal is to protect the financial integrity of all parties involved.

The new requirement is explained in the following section of HB 1163.

“SECTION 3. IC 4-13.6-7-10 IS AMENDED TO READ AS FOLLOWS [EFFECTIVE JULY 1, 2012]: Sec. 10. (a) In order to receive payment under section 9 of this chapter or to proceed against the bond of the contractor required under section 6 of this chapter, any a subcontractor or supplier making a claim for payment on account of having performed any labor or having furnished any material or service in relation to a public works project must file a verified claim with the division within and deliver a copy of the claim to the contractor not later than sixty (60) days from after the date the last labor was performed, the last material was furnished, or the last service was rendered by that subcontractor or supplier. The claim shall state the amount due and owing to the person and shall give as much detail explaining the claim as possible. The division shall notify the contractor of any filed claims before taking action under section 9 of this chapter.
(b) In order to proceed against the bond of the contractor required under section 6 of this chapter, the claimant must notify the surety of the contractor by sending a copy of the claim required by subsection (a) to the surety company. The claimant shall also inform the division and the contractor that the surety has been notified. The division shall supply the claimant with any information the claimant requires to notify the surety and the contractor.
(c) The claimant may not file suit against the contractor’s surety on the contractor’s bond until the expiration of before thirty (30) days after filing of the claim with the division and delivering a copy of the claim to the contractor. If the claim is not paid in full at the expiration of the thirty (30) day period, the claimant may bring an action in a court of competent jurisdiction in the claimant’s own name upon the bond.”

Click here to read Indiana HB 1163 in its entirety.

Once notice has been given for an impending claim on a payment surety bond, the surety will withhold payment to the contractor until the contractor has paid all subcontractors, suppliers of materials, other laborers and everyone else involved in the project.

If you need to purchase a payment surety bond in Indiana or any other state, contact online via our contact form or by phone at 1 (800) 308-4358 Monday through Friday between 7 a.m. and 7 p.m. CST. Our surety specialists can help you get the bond you need quickly, easily and accurately.

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