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AFSB 151 EXAM 2024/2025 WITH 100% ACCURATE SOLUTIONS
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AFSB 151 EXAM 2024/2025 WITH 100% ACCURATE SOLUTIONS
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AFSB 151 EXAM 2024/2025 WITH 100%ACCURATE SOLUTIONS
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. -
Precise 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. - Precise 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 contributed to the loss, but is not relevant to the proof of loss. -
Precise Answer ✔✔D. 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.
Which one of the following statements regarding legal research and unfair claims practices acts is true?
Select one:
A. 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.
B. 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.
C. 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.
D. Unfair claims practices acts prohibit sureties and insurers from misrepresenting pertinent facts or
policy provisions relating to coverages at issue. - Precise Answer ✔✔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?
Select one:
A. 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.
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.
C. Insurance policy forms are often subject to regulatory approval; however, laws cannot affect the
enforcement of rights and remedies under the policies.
,D. 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. - Precise
Answer ✔✔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:
A. Exoneration.
B. Look-see money distribution.
C. Quia timet.
D. The vouching-in procedure. - Precise Answer ✔✔D. The vouching-in procedure.
When a claim is pending on a cosurety bond,
Select one:
A. Each cosurety may establish a reserve for its cosurety share of the loss.
B. The controlling cosurety is normally obligated to pay the full loss and request reimbursement from
the cosureties.
C. Each cosurety is allowed to take credit for the reinsurer's share of the reserve that the cosurety
establishes.
D. The controlling cosurety is not allowed to establish a reserve for any part of the loss. - Precise Answer
✔✔A. Each cosurety may establish a reserve for its cosurety share of the loss.
Fidelity bond claims
Select one:
A. Can expose an insurer to waiver of a condition precedent of bond contracts and defamation actions, if
they are not handled properly.
B. Have variable circumstances; therefore, the fidelity insurer's ultimate loss is rarely fixed when the
insured gives notice of the loss.
C. Offer protections to the fidelity insurer when a late notice of loss occurs, as late notice is typically a
valid defense for the insurer.
, D. Require a proof of loss filed by the insured before an investigation begins, the claim is verified, and
the insured can be confronted. - Precise Answer ✔✔A. Can expose an insurer to waiver of a condition
precedent of bond contracts and defamation actions, if they are not handled properly
In proper handling of a fidelity loss, when can an insurer begin the loss investigation and when can
claims personnel confront the insured?
Select one:
A. The insurer can begin the investigation, but claims personnel should not confront the insured before
the insured has provided an executed proof of loss.
B. The insurer cannot begin the investigation until the insured has provided an executed proof of loss;
but claims personnel can confront the insured without the proof of loss.
C. The insurer can begin the investigation and claims personnel can confront the insured at any time
before the insured has provided an executed proof of loss.
D. The insurer cannot begin the investigation and claims personnel cannot confront the insured until the
insured has provided an executed proof of loss. - Precise Answer ✔✔A. The insurer can begin the
investigation, but claims personnel should not confront the insured before the insured has provided an
executed proof of loss.
Which one of the following statements regarding gathering information for surety claims is true?
Select one:
A. Principals and obligees are usually more cooperative after the claim has been paid than during the
information-gathering process.
B. Separate information gathering sessions—to help resolve questions of liability and to determine the
possibility of enforcing rights the surety acquired—is more efficient and productive than one session.
C. When gathering claims information, the producer is the best source of evidence for recovery from
others.
D. Claims personnel can gather most of the needed information for a surety claim by applying the
questions of who, what, when, where, why, and how to the claim. - Precise Answer ✔✔D. Claims
personnel can gather most of the needed information for a surety claim by applying the questions of
who, what, when, where, why, and how to the claim.
Which one of the following statements is true regarding subrogation when a contract default has
occurred and when the principal has admitted to it?
Select one:
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