NASCLA EXAM PREP 2024/2025 – ALL QUESTIONS WITH COMPLETE SOLUTIONS
| VERIFIED & GRADED A+
Performance Bond -
Answer--Guarantees that the contractor will complete a contract with in its time frame
and conditions
Payment Bonds -
Answer--Guarantees subcontractors and suppliers that they will be paid for work if they
perform properly under a contract
Maintenance bond -
Answer--Guarantees that for stated Typically one year no defective workmanship or
material will appear in the completed project
Completion bond -
Answer--Provide assurance to the financial backers have a construction project but it
will be completed on time
Fidelity bond -
Answer--Covers business owners for losses due to dishonest act by there employees
Lien bond -
Answer--Guarantees that liens cannot be placed against the owners property by
contractors for payment of service
Sub contractors bond -
Answer--Protects the general contractor in the event that subcontractors do not fully
perform the contract and or pay for labor and materials
Bank letter of credit -
Answer--Is not a Bond but is it cash guaranteed to the owner it is not a guarantee of
performance but can be converted to a payment to the owner by a bank or lending
institution
Bid bond -
Answer--Guarantees that the contractor if awarded the job will do the work at the
submitted bid price enter into a contract with the owner and furnish the required
performance and payment bonds
What is a bond -
Answer--Bonds provide protection in the event that the contractual obligation's are not
met
Bond language -
Answer--At a minimum Bond should contain the total dollar amount length of the bond
requirements for notice of the fact or lack of maintenance and bond enforcement
Filing procedures -
,Answer--Construction law contractual relationships govern the bond claims process the
filing process as outlined in the bond
Project changes -
Answer--Unless specifically outlined in the bonds agreement the Surety company will
not cover changes to the original contract in most cases request for additional coverage
must be made and the bonding company must be notified of the contract changes
, Payment in the event of default -
Answer--In the event of default Surety may provide additional finances arrange for a
new contractor or hire subcontractors to complete the work or pay out the amount of the
bond
Miller act of 1935 -
Answer--Current law requiring performance and payment bond on a federal
construction project value greater than $100,000
Miller act amounts -
Answer--50% on contracts less than 1 million 40% of contracts between one and 5
million 2.5 million payment bond for contracts in excess of 5 million
Little Miller act -
Answer--Similar to the Miller act for public works projects
Construction Industry payment protection act of 1999 -
Answer--Addendum to the miller act it's purpose is to improve payment bond
protections for persons who furnish labor or material for use on federal construction
projects to help subcontractors with adequate protection
All risk builders risk insurance -
Answer--A form of property insurance that covers property owners and builders for
buildings under construction
All risk coverage -
Answer--Provides for Direct loss by these perils that are not specifically excluded by the
policy it generally provides coverage for all risks including theft vandalism accidental
loss and damages or distraction
A subrogation clause -
Answer--Occurs when the insurance company pays the insured for damages or loss
and then sues the negligent third-party to pay for the loss
Named peril builders risk insurance -
Answer--Insurance policy having narrower coverage and all risk insurance and specify
what peril are covered typically for fire lightning also wind damage explosion water
damage earthquakes terrorism
Inland marine insurance -
Answer--A type of property insurance that can be purchased for your tools and
equipment it provides coverage for goods in transit and project under construction
Equipment floater policy -
Answer--For direct physical loss of the equipment and is designed to cover mobile
equipment while it is stored on premises in transit or a temporary locations or jobsites
| VERIFIED & GRADED A+
Performance Bond -
Answer--Guarantees that the contractor will complete a contract with in its time frame
and conditions
Payment Bonds -
Answer--Guarantees subcontractors and suppliers that they will be paid for work if they
perform properly under a contract
Maintenance bond -
Answer--Guarantees that for stated Typically one year no defective workmanship or
material will appear in the completed project
Completion bond -
Answer--Provide assurance to the financial backers have a construction project but it
will be completed on time
Fidelity bond -
Answer--Covers business owners for losses due to dishonest act by there employees
Lien bond -
Answer--Guarantees that liens cannot be placed against the owners property by
contractors for payment of service
Sub contractors bond -
Answer--Protects the general contractor in the event that subcontractors do not fully
perform the contract and or pay for labor and materials
Bank letter of credit -
Answer--Is not a Bond but is it cash guaranteed to the owner it is not a guarantee of
performance but can be converted to a payment to the owner by a bank or lending
institution
Bid bond -
Answer--Guarantees that the contractor if awarded the job will do the work at the
submitted bid price enter into a contract with the owner and furnish the required
performance and payment bonds
What is a bond -
Answer--Bonds provide protection in the event that the contractual obligation's are not
met
Bond language -
Answer--At a minimum Bond should contain the total dollar amount length of the bond
requirements for notice of the fact or lack of maintenance and bond enforcement
Filing procedures -
,Answer--Construction law contractual relationships govern the bond claims process the
filing process as outlined in the bond
Project changes -
Answer--Unless specifically outlined in the bonds agreement the Surety company will
not cover changes to the original contract in most cases request for additional coverage
must be made and the bonding company must be notified of the contract changes
, Payment in the event of default -
Answer--In the event of default Surety may provide additional finances arrange for a
new contractor or hire subcontractors to complete the work or pay out the amount of the
bond
Miller act of 1935 -
Answer--Current law requiring performance and payment bond on a federal
construction project value greater than $100,000
Miller act amounts -
Answer--50% on contracts less than 1 million 40% of contracts between one and 5
million 2.5 million payment bond for contracts in excess of 5 million
Little Miller act -
Answer--Similar to the Miller act for public works projects
Construction Industry payment protection act of 1999 -
Answer--Addendum to the miller act it's purpose is to improve payment bond
protections for persons who furnish labor or material for use on federal construction
projects to help subcontractors with adequate protection
All risk builders risk insurance -
Answer--A form of property insurance that covers property owners and builders for
buildings under construction
All risk coverage -
Answer--Provides for Direct loss by these perils that are not specifically excluded by the
policy it generally provides coverage for all risks including theft vandalism accidental
loss and damages or distraction
A subrogation clause -
Answer--Occurs when the insurance company pays the insured for damages or loss
and then sues the negligent third-party to pay for the loss
Named peril builders risk insurance -
Answer--Insurance policy having narrower coverage and all risk insurance and specify
what peril are covered typically for fire lightning also wind damage explosion water
damage earthquakes terrorism
Inland marine insurance -
Answer--A type of property insurance that can be purchased for your tools and
equipment it provides coverage for goods in transit and project under construction
Equipment floater policy -
Answer--For direct physical loss of the equipment and is designed to cover mobile
equipment while it is stored on premises in transit or a temporary locations or jobsites
