Secrets of  Bonding #103: “Expert” Surety Quiz

If you have been reading our surety articles (well over 100 have been published), you may know SOMETHING about surety bonds by now.  So let’s see if you know more than the basics!

(Answers and your Award appear at bottom.)Test


  1. When calculating Working Capital “as allowed,” what portion of an HVAC contractor’s Inventory is included when analyzing an audited Balance Sheet?
    1. 50%
    2. 75%
    3. 100%
  2. Why do underwriters prefer to NOT issue Performance and Maintenance bonds simultaneously?
    1. The bond premiums cannot be accurately calculated
    2. It is not yet known if the project will be built correctly
    3. Performance Bonds may automatically cover one year of defective materials and workmanship
  3. Which accounting method is not acceptable to sureties and why?
    1. Completed Contract, because it excludes open projects
    2. Percentage of Completion, because unearned profits are excluded
    3. Cash, because Accounts Payable, Receivable and other items are excluded
  4. Which if the following assets is treated as Long Term by accountants and Current by surety analysts?
    1. Cash Value of Life Insurance
    2. Face Value of Term Insurance
    3. Pending liability claims
  5. What is the % of bid spread? 1st $125,000  2nd $ 168,000
    1. 34%
    2. 26%
    3. 34%
  6. The purpose of a Dual Obligee Rider is:
    1. Prevents claimants from Dueling over the proceeds of the bond
    2. Protects the surety from paying the bond amount more than once
    3. Assures that all “interested parties” can make a claim
  7. A “Capped Bid Bond”…
    1. Has a definite expiration date
    2. Has a maximum aggregate
    3. Has a maximum penal sum
  8. Which of these financial statement assets would be disallowed by surety underwriters in their analysis?
    1. Stockholder Loan Receivable
    2. Stockholder Loan Payable
    3. Stockholder Deferred Bonus
  9. What is the Debt to Equity Ratio and how will the surety respond? Total Liabilities and Stockholders Equity: $1,450,000 Stockholders Equity: $250,000
    1. $1,200,000 “Too low!”
    2. .17:1 “Let’s write bonds!”
    3. 4.8:1 “Sorry, we’ll pass.”
  10. When is the surety exonerated on a Labor and Materialmen’s Payment Bond?
    1. Upon fulfillment of the contract provisions and expiration of the applicable lien period
    2. One year after completion of the work
    3. When the original bond document is returned to the surety



  1. C, because with an Audit, the CPA has confirmed the asset
  2. B, they may want to avoid continuing their obligation if the project encountered difficulty during construction
  3. C
  4. A
  5. A: 168,000 – 125,000=43,000. 43,000/168,000=25.6 or 26%. The low bid is 26% below the second bid.
  6. B
  7. C
  8. A
  9. C (Trick question: You must first calculate “Total Liabilities” which is 1,450,000-250,000=1,200,000.)  Then 1,200,000/250,000=4.8 or 4.8:1
  10. A


All correct:

7-9 correct:

Less than 7 correct:  

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site, Subdivision, Bid and Performance Bonds since 1979 – we’re good at it!  Call us with your next one.

Steve Golia, Marketing Mgr.: 856-304-7348

First Indemnity of America Ins. Co.

5 thoughts on “Secrets of  Bonding #103: “Expert” Surety Quiz

  1. Judy Graham August 21, 2015 / 2:11 pm


    I received this email through Margaret Rosa. Is it possible for you to put my name on your email list so I won’t miss your posts? I am just learning the various Bonds that are out there and your articles are very informative. I find Bonding very overwhelming at times, but I still want to learn more things about Bonds.

    Thank you.
    Judy Graham
    Business Account Manager
    Lakeside Insurance Center LLC l 7728 Vance Drive l Arvada, CO 80003
    Direct: 720-833-4541 l Fax: 303-531-5433
    [New Circle Lakeside Logo for email]
    COVERAGE & CONFIDENTIALITY: At our firm, coverage cannot be bound or altered without the written confirmation from an authorized Lakeside Insurance Center representative. Additionally, information contained in this message should be considered confidential, and is intended solely for the use of the individual or entity to which it is addressed. Copying, disseminating, or disclosure of this information is strictly prohibited without the express permission of the sender. If you are not the intended recipient, please delete this message and notify the sender immediately. Thank you.

    • stevegolia August 21, 2015 / 6:34 pm

      Hi Judy, I don’t think we can add you – you have to add yourself. Go to and enter your email on the right where it says “Follow this blog.” They you automatically receive a copy of each publication!

      Thanks for your interest. Call if we can help you on any tough bonds. That’s what we do!

      Steve Golia

  2. Elisabete Salazar August 21, 2015 / 5:11 pm

    Good Morning Steve,

    I think this secret should be 103. You sent out a first 101 Stretch that bonding line on 8/6 and a second 101 Little bonds that bite on 8/14.

    Thank you,


    • stevegolia August 21, 2015 / 6:28 pm

      Eli, Thanks for catching that! We will correct the numbering.

      How did you do on the quiz? Did you enjoy it?


      • Eli March 14, 2017 / 10:06 pm

        Hello Steve,

        I didn’t realized you replied to my comment. Thank you!

        We love reading your secrets here at the office, we learn a lot from them.



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