How does an owner's failure to disclose project risks impact a surety bond?

When an owner fails to disclose project risks, it can significantly impact the surety bond's terms and the liability of the surety company. The correct understanding here is that undisclosed risks create a less predictable and riskier environment for the surety. If these risks materialize and lead to a default or claim on the bond, the surety may find itself liable for costs or damages that were not previously accounted for due to the lack of disclosure.

In essence, the surety relies on the information provided during the underwriting process to assess risks and determine bond terms. If key risks are hidden or not adequately communicated, the surety can face unexpected financial obligations, leading to increased liability. Therefore, the owner’s failure to disclose relevant risks has direct implications for the surety’s exposure and responsibilities under the bond.