Surety Bonds Flashcards
1
Q
Suretyship
A
- Promise of one person (obligee) to answer the failure of another person (principle) to do something as promised
2
Q
How do insurance companies perform a suretyship function?
A
Through bonds
3
Q
Commercial/Non-Contract Bonds
A
- License and Permit
- Court Bonds: Fiduciary, Judicial
- Public Official
- Miscellaneous; Lottery, Instrument
4
Q
Contract Bonds
A
- Guarantee performance on time, within budget and according to specifications
- Bid, performance, payment, maintenance, subdivision, supply contract
5
Q
Underwriting Three Cs
A
1) Character
2) Capacity
3) Capital
6
Q
Underwriting
A
- Financial Analysis
- Project Underwriting
7
Q
Suretyship and Insurance (Shared Attributes)
A
- Assumption of iso by a professional risk taker
- Receipt of Premium
- Protection against financial loss
- Risk is defined by a contract
8
Q
Surety Bonds Different than Insurance
A
- Three Party Contracts
- Principal is liability to surety for losses surety pays
- Coverage period is indefinite
- Surety really expects no losses
