Who is the beneficiary under the terms of the bond
Who is the Obligee
What are the 3 C's of underwriting?
What are Character, Capacity, and Capital
Contract bonds typically cannot be ________; keeping the bond in full force and effect until the principal has fulfilled its obligation
What is the name of the formal, written contract required by sureties as a condition of issuing a bond or multiple bonds
License & permit bonds are typically written for a ____-year term or run indefinitely until canceled
Insurance premiums charged to insureds assume that a certain percentage will be paid out as losses. Surety bond premiums are considered _______ fees and what percentage is expected to be paid for losses?
What are "service" fees and zero (0%)
Because different methods of accounting will produce different financial statement results, an underwriter needs to look for _____ over a period of time.
What is trends
Bonds required by local ordinances, state laws, or the federal government
What are License & Permit bonds
In this ownership structure, owners have limited liability and are also taxed individually
What is a Limited Liability Corporation (LLC)
These type of bonds guarantee that the principal will restore the land to its original state after its operations are completed
What is a reclamation or environmental protection bond
"Standing in the shoes" of the Obligee
What is Subrogation
What government program is available to some contractors who do not have the capital necessary to meet the a sureties underwriting requirements
What is the Surety Bond Guarantee Program (through the Small Business Administration)
A _________ is required to, in addition to other things, "faithfully perform"
Who is a Public Official
The reinsurer in a _______ transaction can accept or reject the submission.
What is facultative (facultative reinsurance)
What is the least risky classification of a L&P bond; the principal will comply with the laws that govern the business or activity it conducts.
What is a Compliance-only bond
What must exist between two parties to a bond before there is a bond?
What is a legal or underlying obligation
What two financial areas should be increased by a contractor to make capital more attractive to a surety.
What Maintenance or Warranty bond duration is the most ideal for a surety?
What is 1 year
When a bid bond is required on a project, what bond amount (as a percentage) is the common standard of the total amount bid
What is 10%
These type of bonds pose a larger risk to the surety due to the payment amount for a claim NOT being limited to only the actual damages sustained
What is a forfeiture bond
What is writing and sign
What are the two methods of accounting
A fiduciary named in a will to administer an estate
What is an Executor
What hazard does the surety face when only the principals most likely to default on an obligation are required to furnish bonds
What is Adverse Selection
These are prerequisites for performing special functions that are incidental to business operations
What are permits