Vocab 6

Question 1

a bond provided by a surety company on behalf of a bidder to guarantee to
an owner that the bidder will enter into a construction contract with the owner if
bidder’s bid is accepted.

Answer 1

Bid Bond

Question 2

a firm that guarantees or vouches for the performance or indebtedness of
another party.

Answer 2

Surety

Question 3

a surety company guarantees that the contractor named in the bond
will properly pay all legal debts arising from the construction work.

Answer 3

Payment Bond

Question 4

a surety company guarantees on behalf of the contractor to the
owner the proper performance of the construction contract

Answer 4

Performance Bond

Question 5

one given to guarantee proper and timely delivery of ordered materials.

Answer 5

Supply Bond

Question 6

a claim placed on real property.

Answer 6

Lien

Question 7

a right created by law that permits a worker to place a claim on land
on which improvements have been made

Answer 7

Mechanic’s Lien

Question 8

the maximum amount of uncompleted construction work that a
contractor can have under contract above which no bonds will be provided.

Answer 8

Bonding Capacity

Question 9

construction insurance that provides coverage for a
specific project that is under construction.

Answer 9

Builder’s Risk Insurance

Question 10

– Usually taken out by the owner, a method of combining all
necessary insurance protection for a project in one policy. Objective is to reduce
the overall cost of insurance for the project by providing an all–inclusive policy.

Answer 10

Wrap-up Insurance

Question 11

Insurance that provides liability coverage that is in excess of
specified other insurance policies and also potentially primary insurance for
losses not covered by the other policies.

Answer 11

Umbrella Insurance

Question 12

issued by the authorized representative of an insurance
company stating the types, amounts and effective dates of insurance coverage in
force for a contractor.

Answer 12

Certificate of Insurance

Question 13

a factor, unique to the company, that reflects the past
claim history of that company. This factor is used to increase or decrease the
basic insurance premium charges.

Answer 13

Experience Modification Rating

Question 14

Systematic process of proactively anticipating potential risk and
implementing reasonable advance measures to prevent/minimize those risks from
creating adverse impacts.

Answer 14

Risk Management