Are Contractor Licensing Bonds a Scam?
I wanted to bring attention to our ongoing struggle with CNA Surety. Contractor licensing bonds are intended to safeguard homeowners by ensuring that contractors fulfill their obligations and provide compensation when they fail to do so. However, there’s a significant issue: CNA Surety asserts that they have no obligation to investigate or issue payments unless a court order is in place. This means you first have to sue and win in court before they will release any funds.
Currently, this situation is under review by the California Department of Insurance, which is looking into broader market practices. Here’s a redacted excerpt of their position: CNA’s Stance
Has anyone actually received a payout from a contractor licensing bond claim? What are your thoughts on what’s really happening with this process?
It sounds like you’re dealing with a frustrating situation. Contractor licensing bonds are intended to protect homeowners, but it seems that the conditions under which claims are paid out can create significant hurdles for those affected. The requirement for a court order before any payout can be made does raise questions about the effectiveness of these bonds in providing real protection.
Many people have expressed similar concerns regarding the claims process with surety bonds and how it often feels like they’re navigating a maze designed to delay or deny payouts. This can make it seem like a scam, especially for those who genuinely need compensation for contractor failures.
As for receiving payouts, experiences can vary widely. Some may have successfully navigated the legal process and received their payouts, while others may have faced obstacles that made it nearly impossible. I think a lot of homeowners are left feeling vulnerable and frustrated when the systems meant to protect them seem to favor the bonding companies instead.
It might be helpful to join forces with others facing similar issues, whether through local advocacy groups or forums, to share experiences and strategies. Hopefully, the ongoing review by the California Department of Insurance will lead to changes that make these bonds function as intended, providing actual protection for homeowners.