CRIS Surety Bonds & Construction Guarantees

Question 1

What is the primary purpose of a bid bond in construction projects?

Accepted Answer

To guarantee the bidder will enter into a contract at the bid price if selected

Answer

To guarantee the contractor will complete the project

Answer

To compensate subcontractors if the contractor defaults

Answer

To provide payment for materials if the owner defaults

Question 2

In a surety bond arrangement, who are the three parties involved?

Accepted Answer

Principal, obligee, and surety

Answer

Owner, contractor, and subcontractor

Answer

Insured, insurer, and beneficiary

Answer

Employer, employee, and guarantor

Question 3

What does a performance bond guarantee in a construction project?

Accepted Answer

That the contractor will complete the project per contract terms

Answer

Payment to subcontractors and material suppliers

Answer

That the contractor's bid price will not increase

Answer

That the owner will make timely payments to the contractor

Question 4

Which type of surety bond protects subcontractors and material suppliers from non-payment by the general contractor?

Accepted Answer

Payment bond

Answer

Bid bond

Answer

Performance bond

Answer

Maintenance bond

Question 5

Under the federal Miller Act, what bond amount is required for performance and payment bonds on covered federal construction contracts?

Accepted Answer

100% of the contract amount

Answer

25% of the contract amount

Answer

50% of the contract amount

Answer

75% of the contract amount

Question 6

What is a maintenance bond (warranty bond) in construction surety?

Accepted Answer

A bond guaranteeing the contractor will correct defects during a specified post-completion warranty period

Answer

A bond guaranteeing the contractor will maintain insurance throughout the project

Answer

A bond covering the cost of maintaining construction equipment on-site

Answer

A bond ensuring the owner maintains the property after project completion

Question 7

What is the 'penal sum' in the context of a surety bond?

Accepted Answer

The maximum dollar amount the surety is obligated to pay under the bond

Answer

The premium paid to the surety company for issuing the bond

Answer

The penalty charged to the contractor for project delays

Answer

The deductible the owner must satisfy before the bond responds