A Nevada contractor completes a $300,000 commercial project. The owner claims $50,000 in defective work. If the contractor's bond is called upon, what is the maximum the bonding company will pay for this single claim?
Correct Answer
D) $50,000
The bonding company will pay the actual damages proven (up to the bond limit), which in this case is the $50,000 claimed defective work amount.
Why This Is the Correct Answer
A contractor's bond pays actual proven damages, up to the bond's face amount. The owner's claim is $50,000, which represents the actual damages alleged. The bonding company pays the proven loss — $50,000 — not the project value or some percentage of it.
Why the Other Options Are Wrong
Option A: $100,000
$100,000 has no basis in the facts given. It does not correspond to the claim amount, the project value, or any standard bond calculation relevant to this scenario.
Option B: $300,000
$300,000 is the project contract value, not the claim amount. Bonds pay actual damages proven, not the total contract value. Confusing project value with bond payout is a common error.
Option C: $150,000
$150,000 might arise from applying a 150% bond-to-lien ratio (used in lien contest scenarios) incorrectly. That multiplier applies to lien bonds, not to defective work damage claims.
Memory Technique
Bond pays what you BROKE, not what you BUILT. The owner broke $50,000 worth — that is all the bond covers in this claim.
More Nevada Questions
Under NRS 624, what is the minimum net worth requirement for a Class A General Contractor license in Nevada?
A Nevada contractor files a mechanics' lien for $45,000. What is the required bond amount to release this lien under NRS 108?
According to Nevada building codes, which edition of the International Building Code (IBC) is currently adopted for commercial construction?
A contractor receives a Notice of Disciplinary Action from the NSCB. Within how many days can they request a hearing to contest the action?
Which Nevada building code edition is currently adopted for commercial construction in most Nevada jurisdictions?
What is the minimum net worth requirement for a Nevada Class A general contractor license?
A contractor's employee is injured on a Nevada job site. The contractor lacks workers' compensation insurance. What is the potential penalty under NRS 624?
Under Nevada law, a contractor's workers' compensation insurance policy lapses on June 1st, and they continue working until June 15th before renewing. What is the potential consequence?
A general contractor hires a subcontractor who injures a worker on site. The subcontractor has no workers' compensation insurance. Under Nevada law, who is primarily liable for the claim?
A Nevada contractor fails to carry required workers' compensation insurance. What penalty can the Nevada Industrial Insurance System impose per day of non-compliance?
People Also Study
Business & Financial Management
120 questions · 70% to pass
Contract Administration
60 questions · 70% to pass
Project Management
60 questions · 70% to pass
Related Study Resources
Previous Question
Under Nevada building codes, what is the maximum allowable span for 2×10 floor joists spaced 16 inches on center in residential construction?
Next Question
A Class C contractor's surety bond is in the amount of $15,000. The contractor defaults on three separate projects with damages of $8,000, $12,000, and $6,000 respectively. What is the maximum total amount the surety will pay?