Secrets of Bonding #32: Bond Definitions – Take the Quiz!

Answers appear at the end of the article – good luck!

“You may begin.”

1. Bid Bond

a. Required by Auctioneers
b. A very small bond
c. Bond that accompanies a construction proposal

2. Surety Consent (to accompany bid)

a. Promises to provide the related Performance and Payment Bond
b. Agrees to all conditions in the related contract
c. Agrees that bond claims will be paid within 30 days

3. Bid Bond Percentage

a. Ratio of successful bid proposals
b. Portion of bid bonds used in one calendar year
c. Determines the dollar value of the bid bond

4. Performance Bond

a. Always makes reference to a written contract
b. May not be cancelled by the surety
c. Both a. and b.

5. Balance of Contract Amount

a. The point at which a contract becomes profitable
b. The unpaid portion of the contract
c. Relationship between labor and material costs

6. Payment Bond

a. Used to guarantee loans and leases
b. Guarantees payment of proper union wages
c. Guarantees suppliers of labor and material will be paid

7. Third Tier Sub

a. A class of subcontractors not covered by the Payment Bond
b. Submarines that go very, very deep
c. Low quality subcontractors

8. Subdivision Bonds

a. Similar to Submultiplication and Subaddition bonds
b. Similar to Site Bonds
c. Similar to submarines that go very, very deep

9. Penal Sum

a. Dollar value of a bond
b. Often a source of envy
c. When two penals are added together

10. Site Bonds

a. Guarantees improved vision after Lasik eye surgery
b. Guarantees the construction of public improvements
c. Guarantees a construction contract

11. Single Job Limit

a. The largest job a contractor ever performed
b. The largest job a contractor is interested in undertaking
c. The largest job a surety is willing to bond

12. Work on Hand

a. Remaining “cost to complete” for open projects
b. Underbillings
c. Costs relating to labor performed by hand

Extra Credit:

13. “Full” Indemnity

a. The indemnity of the applicant company including all of its assets
b. The indemnity of the applicant company, all owners and spouses, plus other owned/controlled companies
c. Indemnity equal to the full value of the bond amount in question

Answers:

1: Bid Bond – Bond that accompanies a construction proposal (C)

2: Surety Consent – Promises to provide the related Performance and Payment Bond (A)

3: Bid Bond Percentage – Determines the dollar value of the bid bond (C)

4: Performance Bond – Always makes reference to a written contract AND may not be cancelled by the surety (C)

5: Balance of Contract Amount – The unpaid portion of the contract (B)

6: Payment Bond – Guarantees suppliers of labor and material will be paid (C)

7: Third Tier Sub – A class of subcontractors not covered by the Payment Bond (A)

8: Subdivision Bonds – Similar to Site Bonds (B)

9: Penal Sum – Dollar value of a bond (A)

10: Site Bonds – Guarantees the construction of public improvements (B)

11: Single Job Limit – The largest job a surety is willing to bond (C)

12: Work on Hand – Remaining “cost to complete” for open projects (A)

Extra Credit: “Full” Indemnity – The indemnity of the applicant company, all owners and spouses, plus other owned/controlled companies (B)

Congratulations: You passed!


A special note from the author: Steve Golia

I am an Independent Broker and Surety Bond Specialist. If you wish to co-broker bond business, together we will deliver the best in bonding expertise for your clients.  I have a broad range of markets available and often can solve problems even when others have failed.

Call me now (856-304-7348) or email: Steven.Golia@gmail.com

 

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