Unit 11 Quiz

Question 1

Which surety bond guarantees that bills for labor and materials will be paid by the contractor as they are due?

Answer 1

Payment bond.

Question 2

The party to a surety bond who promises to do or not do a specific thing is…

Answer 2

… the principal (AKA obligator)

Question 3

The surety bond protects…

Answer 3

… the obligatee

Question 4

Who pays the losses under bond contracts?

Answer 4

… the surety

Question 5

What type of ocean marine insurance provides physical damage coverage for the ship while it is in transit?

Answer 5

Hull (like auto insurance part D coverage)

Question 6

The insured has a $1 million personal umbrella policy with a retention limit of $1,000. The insured suffers a $15,000 loss that is excluded by the underlying policy, but not the umbrella. How much of this loss would be paid under the umbrella?

Answer 6

$15,000 Loss - $1,000 SIR = $14,000 claim settlement

Question 7

If the loss is not covered by the underlying policy, how will the umbrella policy handle a loss?

Answer 7

It is covered, but the insured will need to pay a SIR deductible.

Question 8

What policy covers the insured’s liability for damage to a stored aircraft?

Answer 8

Hangarkeepers liability