When calculating a recovery amount from a bond, what factor is typically considered?

The calculation of a recovery amount from a bond typically involves the bond limit and the type of bond. The bond limit establishes the maximum amount that can be recovered, acting as a cap on the insurer's liability. The specific type of bond plays a crucial role as well since different types of bonds have distinct coverage terms and conditions, affecting how recoveries are structured. For instance, a performance bond may cover contractual obligations, while a fidelity bond is designed to protect against losses from theft or fraud. Together, these factors determine the extent and nature of recovery allowed under the bond, making them central to the calculation process.

Other considerations, like the number of claims made or the total amount stolen, may influence the overall situation but do not fundamentally change the method of calculating recoveries tied specifically to bond provisions. Likewise, the duration of bond coverage is relevant to risk assessment but does not directly affect the recovery amount calculation in the same way the bond limit and type do.