AFSB 151 Ch. 2 Practice Exam
When selecting a surety company for a bonding relationship with a contractor,
The producer should consider the surety's suitability factors to the contractor's needs, including the surety's philosophies, financial capacity, stability, and comfort with the projects
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AFSB 151 Ch. 2 Practice Exam
When selecting a surety company for a bonding relationship with a contractor,
The producer should consider the surety's suitability factors to the contractor's needs,
including the surety's philosophies, financial capacity, stability, and comfort with the
projects
Johnson Construction was approved for a $5 million/$20 million annual contract
surety credit. A $5 million/$20 million contract surety credit line means that the
surety is willing to
Bond single jobs up to a contract price of $5 million when the aggregate contract
backlog does not exceed $20 million
A surety bond credit line covers the contractor's normal, anticipated bond needs.
If a special situation develops that would cause a contractor to exceed the credit
line, then
The contractor and the producer should discuss the merits of the case with the
underwriter to determine the desirability of an increased credit line.
As a surety producer, Beth has developed a favorable percentage of the local
bond market and has earned a reputation among local contractors for
professional-quality service. She has established which one of the following?
Position
Which one of the following is a factor of marketing that requires the surety
producer to have education, training, knowledge, skill, and organization to
provide professional service that clients need?
Product
Which one of these categories of court bonds is underwritten on the basis of the
principal's financial capacity?
Judicial bonds
According to the law, companies that write credit enhancement financial
guarantees
Cannot write any other type of insurance within that company
A contractor's percentage-of-completion estimates
are based on the contractor's ability to estimate the cost to complete the project and
recognize income and profit as they accrue during the project
A pre-set surety bond credit limit
Eliminates the need to reevaluate the contractor's need for every bond.
Which one of the following statements regarding a surety's capacity is true?
If a contractor appears to be outgrowing the surety's capacity, the producer should
arrange a backup surety with adequate capacity to replace the first surety before
reaching capacity
The most effective and credible form of promotion for surety producers is
Word-of-mouth advertising and referrals from the producer's satisfied clients
To reach a reasonable rate of return for their bond risks,
Sureties pay competent underwriters and agents competitive salaries and commissions
Which one of the following categories of court bonds is written primarily on the
basis of an attorney's character and reputation for trustworthiness?
Fiduciary bonds
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