AFSB 151 exam 2023 with 100% correct answers / AFSB 151 Study Guide

AFSB 151 exam 2023 with 100% correct answers / AFSB 151 Study Guide
A comparison of how surety operates with how insurance operates shows that underwriting must contrast the nature of insurance policies with bond forms. Which one of the following is a feature that is unique to insurance policies?
Select one:
A. They are typically filed with and approved by insurance departments in each state in which they are to be used
B. They incorporate statutes or other legal documents by reference, thereby extending the obligation beyond the language of the policy itself
C. Special forms drafted for unique circumstances
D. Special forms drafted to exclude specific elements - CORRECT ANSWER-A. They are typically filed with and approved by insurance departments in each state in which they are to be used
Anthony is the surety producer for Coyle Construction (CC). CC has a pre-set annual surety credit line of $5 million/$30 million. About 3 months into the fiscal year, the contractor is bidding on an $8 million job and needs a bid bond. Which one of the following correctly describes Anthony's responsibility as the surety producer?
Select one:
A. Anthony should arrange a back-up surety with adequate capacity because CC appears to be outgrowing the capacity of the current surety.
B. Anthony should execute the bid bond because it is within the $30 million annual line of credit.
C. Anthony should seek underwriting approval before executing the bid bond because it falls outside the $5 million job contract limit.
D. Anthony should execute the bid bond, but will need to seek approval if CC is awarded the job. - CORRECT ANSWER-C. Anthony should seek underwriting approval before executing the bid bond because it falls outside the $5 million job contract limit.
Contract bond claims
Select one:
A. Require that, once the claim is made, the construction project and all affiliated activity, such as materials and other resource delivery, must be halted until the loss is determined and paid.
B. Generally require that the surety consult fewer sources to determine the bond loss than are required when investigating commercial surety and fidelity claims.
C. That are not handled promptly are not affected by variables such as the construction project, materials, and weather conditions.
D. Can raise questions as to fault in the loss, whether the bonded principal or the obligee was responsible. - CORRECT ANSWER-D. Can raise questions as to fault in the loss, whether the bonded principal or the obligee was responsible.
Which one of the following statements regarding fidelity bond claims is true?
Select one:
A. There are no time limits for bringing claims under a fidelity bond, so an insurer does not need to be concerned about whether the loss was discovered during the policy term.
B. The insured's prompt notice of loss and the fidelity's prompt investigation has no impact on the insurer's liability, the cause of loss, or the insured's minimization of damages.
C. Mishandling of funds by people or entities not employed by the insured, such as auditors, lawyers, or financial institutions, cannot be pursued by the insurer as a source of recovery.
D. By promptly investigating a bond loss, an insurer may discover that it has recourse against persons or entities whose conduct caused or