Question

Surety bonds are written for a definite limit called

A) Indemnity limit
B) The limit if liability
C) Loss costs
D) The bond penalty

Answer 1

Surety bonds have a definite limit called 'the bond penalty', which is the maximum amount that will be paid out by the surety in case of default by the principal.

Step-by-step explanation:

Surety bonds, which serve as a guarantee that certain obligations will be met, are written for a definite limit known as the bond penalty. This is the maximum amount the surety will pay in the event of a default. The bond penalty insures the project owner that the principal will comply with the terms of the bond, and it is a critical part of the surety bond agreement.