Characteristics of Suretyship
Underwriting
Classes of Bonds
(Blank)
Classifications of License & Permit Bonds
100

Who is the beneficiary under the terms of the bond

Who is the Obligee

100

What are the 3 C's of underwriting? 

What are Character, Capacity, and Capital

100

Contract bonds typically cannot be ________; keeping the bond in full force and effect until the principal has fulfilled its obligation

What is cancelled. 
100

What is the name of the formal, written contract required by sureties as a condition of issuing a bond or multiple bonds

What is Agreement of Indemnity
100

License & permit bonds are typically written for a ____-year term or run indefinitely until canceled

What is a 1-year term
200

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%)

200

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

200

Bonds required by local ordinances, state laws, or the federal government

What are License & Permit bonds

200

In this ownership structure, owners have limited liability and are also taxed individually 

What is a Limited Liability Corporation (LLC)

200

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

300

"Standing in the shoes" of the Obligee

What is Subrogation

300

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)

300

A _________ is required to, in addition to other things, "faithfully perform"

Who is a Public Official

300

The reinsurer in a _______ transaction can accept or reject the submission. 

What is facultative (facultative reinsurance)

300

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

400

What must exist between two parties to a bond before there is a bond?

What is a legal or underlying obligation

400

What two financial areas should be increased by a contractor to make capital more attractive to a surety. 

What is net worth and working capital
400

What Maintenance or Warranty bond duration is the most ideal for a surety?

What is 1 year

400

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%

400

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

500
Statutes of frauds require bonds to be in ________ and sureties must _______ the bonds. 

What is writing and sign

500

What are the two methods of accounting

Completed contract & percentage of completion
500

A fiduciary named in a will to administer an estate

What is an Executor 

500

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

500

These are prerequisites for performing special functions that are incidental to business operations

What are permits 

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