AFSB 151 Study Guide Exam Questions

AFSB 151 Study Guide Exam Questions and Answers (Solved Papers) 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:

• Anthony should arrange a back-up surety with adequate

capacity because CC appears to be outgrowing the capacity of the current surety.

• Anthony should execute the bid bond because it is within

the $30 million annual line of credit.

• Anthony should seek underwriting approval before

executing the bid bond because it falls outside the $5 million job contract limit.

• Anthony should execute the bid bond, but will need to

seek approval if CC is awarded the job. - Correct Answers ✅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:

• 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. 1 / 4

AFSB 151 Study Guide Exam Questions and Answers (Solved Papers)

• Generally require that the surety consult fewer sources to

determine the bond loss than are required when investigating commercial surety and fidelity claims.

• That are not handled promptly are not affected by

variables such as the construction project, materials, and weather conditions.

• Can raise questions as to fault in the loss, whether the

bonded principal or the obligee was responsible. - Correct Answers ✅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:

• 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.

• 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.

• 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.

• By promptly investigating a bond loss, an insurer may

discover that it has recourse against persons or entities whose conduct caused or contributed to the loss, but is not relevant to the proof of loss. - Correct Answers ✅D. By 2 / 4

AFSB 151 Study Guide Exam Questions and Answers (Solved Papers) promptly investigating a bond loss, an insurer may discover that it has recourse against persons or entities whose conduct caused or contributed to the loss, but is not relevant to the proof of loss.Which one of the following statements regarding legal research and unfair claims practices acts is true?

Select one:

• Even when fidelity and surety businesses are not affected

by unfair claims practices laws that originate from individual consumers' concerns, state lawmakers require that they adhere to these laws.

• Unfair claims practices acts can prevent sureties from

adequately investigating fidelity and surety claims so that standards for prompt settlement or denial can be met.

• Because sureties can retain attorneys experienced in the

fidelity and surety legal matters, claims personnel do not require knowledge of legal rules and theories that govern such coverage and liability.

• Unfair claims practices acts prohibit sureties and insurers

from misrepresenting pertinent facts or policy provisions relating to coverages at issue. - Correct Answers ✅D.Unfair claims practices acts prohibit sureties and insurers from misrepresenting pertinent facts or policy provisions relating to coverages at issue.Which one of the following statements regarding surety compliance with statutes and regulations is true? 3 / 4

AFSB 151 Study Guide Exam Questions and Answers (Solved Papers)

Select one:

• Courts may interpret any bond or fidelity policy provision

to the insured's benefit whether or not it prejudices an insurer's ability to investigate the claim.

• Surety and fidelity contracts are often prescribed by

statute or regulation, including requirements for many license and permit bonds, fidelity coverages, and public official bonds.

• Insurance policy forms are often subject to regulatory

approval; however, laws cannot affect the enforcement of rights and remedies under the policies.

• When an obligee drafts a surety bond with provisions that

are onerous to the surety, if the surety executes the bond without objections, courts will interpret any dispute in the surety's favor. - Correct Answers ✅B. Surety and fidelity contracts are often prescribed by statute or regulation, including requirements for many license and permit bonds, fidelity coverages, and public official bonds.Surety claims against principals who appear to have resources to pay the claims can be referred to the principals and indemnitors who can respond before the surety must pay and before the surety seeks indemnification from them. This practice is called

Select one:

• Exoneration.
• Look-see money distribution.
• / 4