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Surety / Fidelity

Ga P & C Insurance Exam - Surety and Fidelity Bonds

QuestionAnswer
What is a surety bond? contract that guarantees fulfillment of an obligation (i.e. guarantee of performance)
Who are the 3 parties to a surety bond? 1. Principal (takes out the bond) 2. Obligee (requires princ. to get bond) 3. Guarantor (co. that issues bond)
Are losses expected with a surety bond? No- that means contract is in default
What's the process if a surety bond suffers a loss? 1. contract is in default 2. Guarantor pays obligee 3. Guarantor subrogates against Principal
What are two major classifications of Judicial Surety Bonds? 1. Litigation (Bail, Cost, Appeals) 2. Fiduciary (Admin, executor, Guardianship)
What is the purpose of fidelity bonds? to cover losses resulting from theft, forgery or embezzlement by employees
Who needs to take out fidelity bonds? 1. businesses 2. non-profits 3. churches
What are the parties to a fidelity bond? parties: principal (employee), obligee (employer) and guarantor (ins co)
What can cause a fidelity bond to be terminated and what is the required notice? terminated when employee commits dishonest act; 15-30 days notice
What is the discovery period for fidelity bonds? up to 1 year
Are fidelity bonds applicable to acts committed by someone who was not an employee of obligee at time of dishonest act? no
What are 4 types of fidelity bonds and which employees are covered by each? 1. Individual (covers 1 pers) 2. Named Schedule (covers >1 named pers) 3. Position Schedule (covers all in specified position title) 4. Blanket (covers all employees)
Which bond guarantees that laws and regulations of a particular biz are followed? license or permit bond
Which bond guarantees property gets handed over to obligee (i.e. owner of house being built) even if contractor fails to pay all the bills for materials or labor? payment bond or labor and material bond
Describe the obligations outlined in a bid bond 1. bidder must sign and accept the contract 2. a performance bond will be issued
What type of bond applies to administrators and trustees? fiduciary bonds
What is the name for a person appointed by a court to care for the estate of a deceased with no will? an administrator
What type of bond guarantees delivery of supplies, equipment or products? supply bond
What type of bond is similar to an insurance policy? fidelity bond
What type of bonds guarantee that laws and regulations of a biz or activity are followed (or certain taxes paid)? license and permit bonds
What type of bond guarantees the lender that a contractor (borrower) will use $ on project and complete it free of liens? completion bond
What type of bond guarantees the homeowner that a contractor will complete work according to contract? performance bond
What type of bond guarantees indemnification in the case of lost securities or valuable papers? lost instrument bonds
Created by: jkbick
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