Which statement about surety bonds is TRUE?
Explanation
Suretyship is a three-party arrangement — the principal whose obligation is guaranteed, the surety that guarantees it, and the obligee or statutory beneficiaries who may claim — and a surety that pays a valid claim has a right of indemnity against the principal and any indemnitors. (a) reverses the roles: the principal is the party guaranteed against, not the party protected. (b) counts two parties and then mislabels the instrument as insurance. (c) describes insurance, where premium income absorbs losses and the insurer has no claim back against its insured. In the license context, B&P §7071.11(e) requires the surety to notify the Registrar within 30 days of any payment on the bond.
Law Reference: B&P Code §7071.11(e)This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →
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