A contractor's bond claim is filed for $8,000 in Nevada. The contractor's bond amount is $15,000. If multiple claims total $25,000, how much will this specific claimant receive from the bond?
Correct Answer
C) $4,800
When claims exceed the bond amount, payments are prorated. $8,000 ÷ $25,000 × $15,000 = $4,800.
Why This Is the Correct Answer
When total claims against a bond exceed the bond's face value, each claimant receives a prorated share. The formula is: (Individual Claim ÷ Total Claims) × Bond Amount. Here: $8,000 ÷ $25,000 = 0.32 (32%), and 32% × $15,000 = $4,800. This ensures all claimants are treated equitably.
Why the Other Options Are Wrong
Option A: $15,000
$15,000 is the total bond amount, not what a single claimant receives. Paying one claimant the full bond would be unfair to other valid claimants and is not how proration works.
Option B: $8,000
$8,000 is the full amount of the claim, which the claimant would receive only if total claims did not exceed the bond. Since claims exceed the bond, full payment is not possible.
Option D: $6,000
$6,000 appears to be based on an incorrect calculation (perhaps $8,000 ÷ $25,000 × $15,000 computed incorrectly, or a $15,000 ÷ $25,000 ratio applied to something else). The correct proration yields $4,800.
Memory Technique
Use the 'pie slice' method: the bond is a pie. Each claimant's slice is proportional to their piece of the total claims. This claimant owns 8/25 of the total claims, so they get 8/25 of the $15,000 pie.
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