A contractor's bond claim is filed for $18,000, but the bond amount is only $15,000. How much can the claimant recover from the bond?
Correct Answer
A) $15,000 maximum
Bond recovery is limited to the bond amount. If the bond is $15,000, that is the maximum recovery possible regardless of the claim amount.
Why This Is the Correct Answer
$15,000 maximum is correct. A contractor's bond represents a finite pool of funds. The surety bond only guarantees up to the face amount of the bond. Regardless of the actual damages claimed, the claimant cannot recover more than the total bond amount of $15,000.
Why the Other Options Are Wrong
Option B: $18,000 if claim is valid
$18,000 if the claim is valid is incorrect. Even a fully valid, proven claim cannot exceed the bond amount. The bond is not unlimited — it is a specific financial instrument capped at its face value.
Option C: Nothing, claim exceeds bond amount
Nothing, claim exceeds bond amount is incorrect. Exceeding the bond amount does not invalidate the entire claim. The claimant can recover up to the full bond amount of $15,000 — they simply cannot recover the excess $3,000 from the bond itself (though they might pursue the contractor directly).
Option D: Prorated amount based on total claims
Prorated amount based on total claims is incorrect. Proration applies when multiple claimants compete for a bond that cannot satisfy all claims. With a single claimant, the full bond amount up to $15,000 is available.
Memory Technique
A bond is like a piggy bank — you can only take out what's in it. The bank has $15,000; you asked for $18,000; you get $15,000 and the extra $3,000 comes from somewhere else (or nowhere).
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