Say you did mess up (God forbid), you didn’t pull through on time, the project didn’t pan
out as it should’ve, or negligence happened— then your bond will be at risk if a claim is placed against it!
If they do file a claim, then the claimant finds out who issued the bond and they contact the bonding company to file a claim. The company then receives, responds, and investigates the claim to find out if the claim is truly valid— if the bonding company finds that the claim is invalid then no further action is taken, but if it is valid the bond amount will be paid out. You may think that they won’t pay out to a claimant, but they do since they are bound by law to be impartial and pay out when warranted!
If the principal is paid out, then you will be on the hook for the amount and the bonding company will then demand the money from you! It is always extremely important to treat surety bonds with respect and to always carry out the commitments that are promised by them!