What do claims against bonds typically cover?

Claims against bonds typically cover actual damages incurred due to the principal's failure to fulfill contractual obligations or actions that lead to loss or harm. Bonds are designed to protect consumers and ensure that licensed dealers or contractors adhere to compliance and regulations. When a claim is made, it is based on the tangible loss or harm that has occurred, emphasizing the actual damages suffered rather than potential future losses or estimated income.

The nature of bonding is to provide security against specific obligations, and thus, they do not cover hypothetical situations like loss of business income or future profits, as these are not actual damages incurred at the time of the claim. Therefore, focusing on actual damages ensures that the claims remain grounded in reality and are directly tied to the actions of the bonded entity.