4 - D Surety Bonds and Fidelity Coverages
Revised 2025-2026 Most Recent Version
Comprehensive 50 Questions and Verified
Answers Accurate Solutions Already Graded A+
Get it 100% Correct
A fidelity bond covers:
A. The public from a public official's lack of performance
B. A self-insured business for workers' compensation claims filed by its employees when
the business cannot meet its obligations
C. Principal and interest payable under the terms of a contract or promissory note
D. An insured business for loss resulting from any dishonest acts committed by its
bonded employees - CORRECT ANSWER: D. An insured business for loss resulting
from any dishonest acts committed by its bonded employees
A fidelity bond provides a guarantee that an employee will NOT perform certain acts,
such as theft or fraud. Who is the obligee in a fidelity bond?
A. The employee
B. The customer
C. The employer
D. The insurer - CORRECT ANSWER: C. The employer
A reclamation bond:
A. Guarantees that principal and interest will be paid per the terms of the contract or
promissory note
, B. Guarantees that an issuer of a copy of a lost financial instrument will not suffer an
economic loss if the owner of the instrument later finds and negotiates the original
C. Guarantees a principal will faithfully perform his duties as prescribed by law or the
bylaws of the obligee
D. Guarantees the health, safety, and welfare of the public during and after mining
operations, and guarantees land will be restored to its original condition - CORRECT
ANSWER: D. Guarantees the health, safety, and welfare of the public during and after
mining operations, and guarantees land will be restored to its original condition
ABC Construction recently won a bid to reconstruct the town park. After a few months of
work, ABC Construction realizes they won't make any money on the project and walk
away, leaving the park half-finished. Luckily, the town had required ABC Construction to
hold a surety bond from Parker Sureties, who can now step in to finance the completion
of the job. Which of the following statements is TRUE?
A. Parker Sureties will have to pay half the remaining costs for completing the park
B. Parker Sureties will not be able to seek recompense from ABC Construction
C. Parker Sureties will have to pay 75% the remaining costs for completing the park
D. Parker Sureties can seek recompense from ABC Construction - CORRECT
ANSWER: D. Parker Sureties can seek recompense from ABC Construction
ABC Insurance decides to take on the role of a surety, guaranteeing the performance of
Gradient Industries in the construction of a new shopping complex. ABC Insurance
wants to provide themselves a safety net in case Gradient Industries fails to deliver and
ABC Insurance ends up on the hook for millions of dollars. ABC Insurance turns to a
fourth company, who agrees to indemnify ABC Insurance in the even Gradient
Industries fails to perform. This fourth party would be considered a / an:
A. Indemnitor
B. Principal
C. Trust
D. Obligee - CORRECT ANSWER: A. Indemnitor
Revised 2025-2026 Most Recent Version
Comprehensive 50 Questions and Verified
Answers Accurate Solutions Already Graded A+
Get it 100% Correct
A fidelity bond covers:
A. The public from a public official's lack of performance
B. A self-insured business for workers' compensation claims filed by its employees when
the business cannot meet its obligations
C. Principal and interest payable under the terms of a contract or promissory note
D. An insured business for loss resulting from any dishonest acts committed by its
bonded employees - CORRECT ANSWER: D. An insured business for loss resulting
from any dishonest acts committed by its bonded employees
A fidelity bond provides a guarantee that an employee will NOT perform certain acts,
such as theft or fraud. Who is the obligee in a fidelity bond?
A. The employee
B. The customer
C. The employer
D. The insurer - CORRECT ANSWER: C. The employer
A reclamation bond:
A. Guarantees that principal and interest will be paid per the terms of the contract or
promissory note
, B. Guarantees that an issuer of a copy of a lost financial instrument will not suffer an
economic loss if the owner of the instrument later finds and negotiates the original
C. Guarantees a principal will faithfully perform his duties as prescribed by law or the
bylaws of the obligee
D. Guarantees the health, safety, and welfare of the public during and after mining
operations, and guarantees land will be restored to its original condition - CORRECT
ANSWER: D. Guarantees the health, safety, and welfare of the public during and after
mining operations, and guarantees land will be restored to its original condition
ABC Construction recently won a bid to reconstruct the town park. After a few months of
work, ABC Construction realizes they won't make any money on the project and walk
away, leaving the park half-finished. Luckily, the town had required ABC Construction to
hold a surety bond from Parker Sureties, who can now step in to finance the completion
of the job. Which of the following statements is TRUE?
A. Parker Sureties will have to pay half the remaining costs for completing the park
B. Parker Sureties will not be able to seek recompense from ABC Construction
C. Parker Sureties will have to pay 75% the remaining costs for completing the park
D. Parker Sureties can seek recompense from ABC Construction - CORRECT
ANSWER: D. Parker Sureties can seek recompense from ABC Construction
ABC Insurance decides to take on the role of a surety, guaranteeing the performance of
Gradient Industries in the construction of a new shopping complex. ABC Insurance
wants to provide themselves a safety net in case Gradient Industries fails to deliver and
ABC Insurance ends up on the hook for millions of dollars. ABC Insurance turns to a
fourth company, who agrees to indemnify ABC Insurance in the even Gradient
Industries fails to perform. This fourth party would be considered a / an:
A. Indemnitor
B. Principal
C. Trust
D. Obligee - CORRECT ANSWER: A. Indemnitor
