Which of the following statements is correct with respect to bonding?
A) Bonding is another term for insurance. The two terms, bonding and insurance, are interchangeable.
B) If a person is bonded and that person commits some wrongful act such as stealing a client's money, the bonding company is bound to compensate him for any losses he suffers from being caught.
C) Bonding provides protection to the victim injured by the wrongful conduct of the person bonded.
D) Bonding provides protection against losses incurred because of fluctuations in the financial markets.
E) Bonding is a government certification system whereby the government guarantees that a person so bonded or certified will do the job he is hired to do as set out in the bonding certificate.

Question

Quizplus · Accepted Answer

Bonding specifically refers to a financial guarantee provided by a third party (the bonding company) that compensates the victim for losses caused by the wrongful actions (such as theft or fraud) of the bonded individual or entity. This is distinct from insurance, which generally covers losses from accidents or unforeseen events, and not intentional wrongful acts committed by the insured party.

Which of the Following Statements Is Correct with Respect to Bonding