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Property and Casualty Insurance > Bonding > Flashcards

Flashcards in Bonding Deck (8)
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1
Q

Surety Bond

A

guarantees a specific obligation will be fulfilled. 3 party contract involving a principal, obligee, and surety

2
Q

Principal or Obligor

A

Person who is supposed to do something by obligation. Must apply and pay for the bond.

3
Q

Obligee

A

Person for whom work is to be done. Protected by the bond for actual loss or damages up to the bond limit.

4
Q

Bond Penalty

A

Bond limit. Monetary amount the surety is liable for in a bond agreement. Surety is liable for payment up to the penalty amount

5
Q

Surety

A

The insurance company issuing the bond. Guarantees work will be done or the obligee will be indemnified for their loss.

6
Q

Contract Bond

A

Used in construction to guarantee the principal (contractor) will perform on the contract.

7
Q

License and Permit Bonds

A

Occupational Bonds. Guarantee the licensee (obligor) will be able to pay the government body or a third party suffering loss (obligee) for a violation of terms of a license or permit. Required by Electricians, plumbers, loan companies, etc.

8
Q

Judicial Bonds

A

Used in court proceedings. Guarantees payment of a verdict while an appeal is considered.