178. Surety Pop Quiz (Are you smarter than the average bear?)

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.

  1. “P&P Bond” means: A) Preserve and Protection Bond B) Performance and Premium Bond C) Performance and Payment Bond
  2. The Obligee: A) Is the beneficiary of the bond B) Is the Owner of the bond C) Applies for the bond
  3. Penal Sum is the: A) Punishment for late completion B) A famous soup made in Asia C) The bond amount
  4. The party whose actions the bond concerns: A) Principle B) Principal C) Prince Epal
  5. 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
  6. Collateral: A) Is frothy and collects around the rim B) Is lateral to the collar C) Security deposit held by the surety
  7. The formal name of the T-List: A) Circular 570 B) Circular 750 C) Circular 007
  8. A legitimate Payment Bond claimant: A) All painters B) Local state government C) Laborer on the bonded project
  9. 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
  10. 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.

  1. A) Performance and Payment Bond. I hope you got that one!
  2. B) The Obligee is the beneficiary of the bond
  3. C) Penal sum is the bond amount. (But that soup is awesome!)
  4. B) The party whose actions the bond concerns is the Principal
  5. A) Dual Obligee bonds have multiple beneficiaries
  6. C) Collateral is a security deposit held by the surety
  7. A) The T-List (Treasury Department List of approved sureties) is Circular 570
  8. C) A legitimate Payment Bond claimant is a laborer on the bonded project
  9. B) Overrun is an increase in the contract price
  10. 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.

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First Indemnity of America Insurance Company
2740 Rt. 10 West, Suite 205
Morris Plains, NJ 07950
Office: 973-541-3417

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