Question

Which of the following statements applies to a Surety Bond?

a) Protection is for the benefit of the principal.
b) Either the insurance company or the obligee may cancel at any time.
c) The obligee is that party which is the insured under a contract of insurance.
d) When the Surety pays a claim, it then has the right to recover from the principal

Answer 1

A surety bond is a type of insurance that provides financial protection to the obligee, and when the surety pays a claim, it has the right to recover from the principal.

Step-by-step explanation:

A surety bond is a type of insurance that provides financial protection to the obligee, which is the party that is insured under a contract. In this case, option (c) is the correct statement. The surety bond ensures that the principal, who is the party responsible for fulfilling the terms of the contract, will perform their obligations. If the principal fails to do so, the surety will pay a claim to the obligee and then has the right to recover the amount from the principal. Therefore, option (d) is also correct.