When it comes to surety bonds, you know your way around a power of attorney. But are you smarter than the average bear?
Here goes. Answers at the end. No peeking.
- “P&P Bond” means: A) Preserve and Protection Bond B) Performance and Premium Bond C) Performance and Payment Bond
- The Obligee: A) Is the beneficiary of the bond B) Is the Owner of the bond C) Applies for the bond
- Penal Sum is the: A) Punishment for late completion B) A famous soup made in Asia C) The bond amount
- The party whose actions the bond concerns: A) Principle B) Principal C) Prince Epal
- Dual Obligee means: A) Bond has multiple beneficiaries B) The Obligees duel to determine outcome of the bond claim C) The bond has dual “exhaust” clauses
- Collateral: A) Is frothy and collects around the rim B) Is lateral to the collar C) Security deposit held by the surety
- The formal name of the T-List: A) Circular 570 B) Circular 750 C) Circular 007
- A legitimate Payment Bond claimant: A) All painters B) Local state government C) Laborer on the bonded project
- Overrun: A) When the contractor has too much work on hand B) When the contract price is increased C) When asphalt paving is applied too thick
- Example of an Obligee default: A) Failure to sign the bond B) Failure to pay as required in the contract C) Failure to cap the liquidated damage clause in the surety consent
Bonus Question: Can an insurance agent make a Payment Bond claim for the uncollected surety premium? A) DUH!!! B) I dunno C) What?!
All right, here are the answers.
- A) Performance and Payment Bond. I hope you got that one!
- B) The Obligee is the beneficiary of the bond
- C) Penal sum is the bond amount. (But that soup is awesome!)
- B) The party whose actions the bond concerns is the Principal
- A) Dual Obligee bonds have multiple beneficiaries
- C) Collateral is a security deposit held by the surety
- A) The T-List (Treasury Department List of approved sureties) is Circular 570
- C) A legitimate Payment Bond claimant is a laborer on the bonded project
- B) Overrun is an increase in the contract price
- B) Example of an Obligee default is the failure to pay as required in the contract
Bonus Question: NO! Payment bonds cover suppliers of labor and material. The original name for these instruments is a “Labor and Materialmen’s Payment Bond.” Insurance premiums are not covered.
First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
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