Surety Bond Practice Exam

A cost bond primarily covers the legal costs associated with litigation, specifically ensuring that a party has the means to pay for the costs that may arise throughout a legal process. This can include costs such as court fees and other expenses necessary to pursue or defend a claim. The provision of a cost bond assures the court that the party will not waste judicial resources.

In contrast to other types of damages or fees, such as losses due to property damage, compensation for emotional distress, or punitive damages, a cost bond is specifically focused on covering the expenses incurred during litigation rather than any level of damage or distress that may be awarded at the conclusion of a legal matter. Understanding the unique purpose of a cost bond is critical when evaluating its role in legal proceedings.