Question

As a requirement for getting her New York adjuster license, Alice is required to submit proof of bonding with her application. She purchases a surety bond from PBJ Bonds. In this contract, PBJ Bonds would be considered the:

Option 1: Obligee
Option 2: Principal
Option 3: Surety
Option 4: Indemnitor

Answer 1

In Alice's situation, where she requires a surety bond for her New York adjuster license, PBJ Bonds acts as the 'surety', the entity responsible for the bond. Alice herself is the 'principal', and the obligee is typically the licensing entity that requires the bond.

Step-by-step explanation:

In the context of surety bonds, there are three primary parties involved: the principal, the surety, and the obligee. In this scenario, Alice is looking to get her New York adjuster license, and she is required to purchase a surety bond. PBJ Bonds is the company that issues the bond. Accordingly, PBJ Bonds fulfills the role of the surety, the party that agrees to be responsible for the debt, default, or failure of the principal.

The principal is the party that purchases the bond; in this case, that would be Alice, as she would perform the duties that the bond ensures. The entity requiring the bond, which in this case would typically be the licensing body such as the New York State Insurance Department, is known as the obligee. They are the party to whom the principal must demonstrate accountability.