220 - Unit 11 Test Questions - Surety Bonds

What is the difference between surety ship vs. insurance?

A. All of the answers are correct Correct B. Insurance policies are cancelable and nonrenewable; a surety bond is non-cancelable C. A surety bond, or surety ship, is one wherein the fulfilling of an obligation by one party to another is guaranteed by a third party, a three-party contract, rather than two parties (insurer and insured). D. Insurance pays to or on behalf of insured; in surety ship the one making the guarantee is called upon to pay because of the default by the party who was performing the obligation. all answers are correct

Which type of bond is required of investment companies guaranteeing against misrepresentation of securities and defrauding the public generally?

A. Blue Sky Bond

Which type of fiduciary bond is required by persons appointed to conserve remaining assets and protect creditors?

A. Insolvency Bond

Which bond guarantees indemnification to the obligee for any losses resulting from the principal's failure to complete the contract work in accordance with specifications?

A. Performance Bond

Which type of court bond would be required of a defendant to guarantee their appearance in court?

B. Bail Bond

What are the three underwriting characteristics for bonds?

B. Character, capital, and capability

Which type of bond is one that guarantees the performance of a person appointed by a court, or named in a will or deed of trust to take possession of property, collect assets, make investments, pay debts, sell assets, carry on business, etc?

B. Fiduciary Bond

Which type of bond may be required by a public body for guaranteeing the licensee will operate in conformity with general laws or for the purpose of protecting the public against harm from unfair business?

B. License Bond

Which bond guarantees that all labor and materials for the project will be paid by the contractor upon the completion of the work, which also guarantees there will be no mechanic's liens or similar problems after completion?

B. Payment Bond

Which type of bond may be required by a public official for their term of office?

B. Public Official Bond

Which bond guarantees to a permitting authority that promised streets, sidewalks, sewers, streetlights and other required improvements would be installed?

B. Subdivision Bond

Under what conditions would the bonding company usually require an indemnitor?

B. The surety satisfying itself that the principal has the capabilities to perform the obligation, but is lacking the necessary financial resources to carry it safely through to completion.

A man wanted to have a building erected at a competitive price, completed within a specified time, with workmanship guarantee for one year. Which bonds are required?

Bid Bond, Performance Bond, Payment Bond, and Maintenance Bond

Which type of fiduciary bond is designed for those who are appointed to manage and preserve property other than estates of decedents, such as those appointed as guardians of minors or incompetents?

C. Conservation Bond

Which type of bond is furnished by both the plaintiffs and defendants in litigation to protect the opposing party from loss in the event the principal fails to show a legal entitlement to the remedy sought?

C. Court Bond

Which type of license bond holds a governmental body harmless from any injuries or damage caused by the principal's activities?

C. Indemnity Bond

Which type of bond allows an issuing company to reissue a lost stock certificate, bond or similar instrument?

C. Lost Instrument Bond

Which bond guarantees delivery at an agreed price for purchasing goods from another?

C. Supply Bond

Which type of fiduciary bond is designed for those who administer estates of deceased persons?

D. Probate Bond

Which type of bond is provided to the Department as evidence of compliance with state law and guaranteeing financial responsibility to respond to obligations?

D. Self-Insurance Bond