Ga P & C Insurance Exam - Surety and Fidelity Bonds
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| What is a surety bond? | contract that guarantees fulfillment of an obligation (i.e. guarantee of performance)
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| 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)
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| Are losses expected with a surety bond? | No- that means contract is in default
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| 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
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| What are two major classifications of Judicial Surety Bonds? | 1. Litigation (Bail, Cost, Appeals)
2. Fiduciary (Admin, executor, Guardianship)
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| What is the purpose of fidelity bonds? | to cover losses resulting from theft, forgery or embezzlement by employees
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| Who needs to take out fidelity bonds? | 1. businesses
2. non-profits
3. churches
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| What are the parties to a fidelity bond? | parties: principal (employee), obligee (employer) and guarantor (ins co)
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| 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
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| What is the discovery period for fidelity bonds? | up to 1 year
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| Are fidelity bonds applicable to acts committed by someone who was not an employee of obligee at time of dishonest act? | no
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| 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)
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| Which bond guarantees that laws and regulations of a particular biz are followed? | license or permit bond
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| 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
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| Describe the obligations outlined in a bid bond | 1. bidder must sign and accept the contract
2. a performance bond will be issued
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| What type of bond applies to administrators and trustees? | fiduciary bonds
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| What is the name for a person appointed by a court to care for the estate of a deceased with no will? | an administrator
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| What type of bond guarantees delivery of supplies, equipment or products? | supply bond
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| What type of bond is similar to an insurance policy? | fidelity bond
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| What type of bonds guarantee that laws and regulations of a biz or activity are followed (or certain taxes paid)? | license and permit bonds
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| What type of bond guarantees the lender that a contractor (borrower) will use $ on project and complete it free of liens? | completion bond
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| What type of bond guarantees the homeowner that a contractor will complete work according to contract? | performance bond
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| What type of bond guarantees indemnification in the case of lost securities or valuable papers? | lost instrument bonds
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