What happens when a surety bond is claimed?

When a surety bond is claimed, the surety typically pays the obligee in order to fulfill the bond's obligation, thus taking responsibility to make the obligee whole. This is done even before investigating the validity of the claim. By paying the claim promptly, the surety helps ensure that the obligee is not left in a difficult position due to the principal's failure to fulfill their obligations. Following the payment, the surety then has the right to seek recourse against the principal, which means the surety will pursue recovery of the amount paid from the principal who defaulted on their obligations. This process exemplifies the nature of surety bonds, where the surety acts as a guarantor to the obligee while maintaining a contractual relationship with the principal.

In contrast, the other options detail scenarios that do not accurately reflect the process of claiming a surety bond. The principal is not relieved of their obligations simply because a claim is made; they are still responsible for fulfilling their duties to the obligee and for reimbursing the surety. Claims are not automatically denied; they must be investigated to determine their validity. Finally, the obligee does not need to wait for a hearing to process a bond claim; the claim can be