HomeSurety Bond Terms

Glossary of Surety Bond Terms

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The Surety Bond business has its own language and understanding, and the wording can be challenging. is here to help. Below is a list of common surety bond terms and definitions of what a surety bond is.


A fiduciary appointed by a probate court to manage or distribute the assets of an estate of a person who died without leaving a will.

Admiralty Court

Court bond filed in connection with litigation under maritime law.

Advance Payment Bond
Guarantees repayment by the principal of monies advanced in connection with a construction or supply bond or other type of contract.


A person licensed by a state to conduct insurance sales business and who has been appointed by an insurance company to represent it.

Alcohol Bond

A general term describing a bond given in compliance with federal or state laws or regulations governing the sale & manufacture or warehousing of alcohol for beverage or non-beverage purposes. Where the alcohol is intended for beverage purposes, the bond is frequently referred to as a liquor bond or intoxicating liquor bond.

Annual Bond

One written to cover contractors or bids awarded, or submitted during an annual period, or for a period terminating within a fiscal year.

Appeal Bond

One filed in court by a party against whom a judgment has been rendered, in order to stay execution of the judgment pending appeal to a higher court, in hope of reversing the judgment. The bond guarantees that the judgment will be paid if the appeal fails.


A questionnaire, which must be completed when required, by an applicant for a bond. It gives the company information about the applicant and contains his/her agreement to indemnify the surety in the event of loss, as well as his/her promise to pay the premium.

Attachment Bond

The act or process of taking, apprehending or seizing persons or property by means of judicial order, and bringing the same into the custody of the court for the purpose of securing satisfaction of the judgment ultimately to be entered in the action.

Attachment Defendant Bond to Discharge or Release

When an attachment has been issued, a defendant may discharge the attachment by giving the bond conditioned for the payment of any judgment that may be rendered against him/her in the action, with interest and costs.

Attachment Plaintiff Bond

It is taken as security for the payment of any judgment that may be recovered by the plaintiff in the action. Attachment is allowed only where the plaintiff alleges a statutory ground for it (e.g. defendant is a nonresident or is about to leave the jurisdiction or remove or conceal his/her property). The bond, which the plaintiff is required to furnish, provides for indemnity to the defendant against loss or damage in case it is finally decided that a statutory ground did not exist or the plaintiff fails to recover a judgment against the defendant.


To bear witness, to be true or genuine; to certify.

Attorney in Fact

The holder of a Power of Attorney granted by a surety company empowering the execution of a surety bond on behalf of the company. An Attorney In Fact for an insurance company is sometimes called an "Agent."

Bad Faith

Design to deceive another; conscious wrong doing or lack of appropriate investigation/action.

Bankers Blanket Bond

A bond which covers loss of money, merchandise, or other property owned by the insured or in which he/she has a pecuniary interest, when such loss is due to dishonesty of his/her employees. All employees are covered under the bond unless specifically excluded.


The state of being unable to pay debts as they are or come due as regulated by bankruptcy laws. Straight bankruptcy (chapter 9) deals with the condition of insolvency in which the court provides for assets to be distributed to creditors. Debtor rehabilitation provisions (under chapter 11 and 13) of the Bankruptcy Act provide for rehabilitation and reorganization in which creditors look to future earnings of the bankrupt to satisfy claims. Bankruptcy is a legally declared inability or impairment of ability of an individual or organization to pay their creditors. A declared state of bankruptcy can be requested by creditors in an effort to recoup a portion of what they are owed. However, in the overwhelming majority of cases, the bankruptcy is initiated by the bankrupt individual or organization.

Bankruptcy Bond

A Fiduciary Bond written to guarantee the faithful performance of duties for receivers and trustees in bankruptcies who are appointed by the courts for the benefit of creditors.

Bankruptcy Code

Chapter 7 – Provides for “liquidation” (sale) of the debtor’s nonexempt property and the distribution of the proceeds to creditors.

Chapter 9 – Provides for reorganization of municipalities and other public bodies.

Chapter 11 – Provides for reorganization of corporations and partnerships with payments to creditors over a stated time. Individuals and sole proprietors may also file under this Chapter.

Chapter 12 – Provides for adjustment of debts of “family Farmer” or “family fisherman” as defined in the Code.

Chapter 13 – Provides for the adjustment of debts of individuals over time, usually three to five years.

Chapter 15 – Provides for adjustment of debts in cross-border cases.

Bid Bond

Given by a bidder for a supply or construction contract to guarantee that the bidder, if awarded the contract within the time stipulated, will enter into the contract and furnish the prescribed performance bond. Default will ordinarily result in liability for the difference between the amount of the principal's bid and the bid of the next low bidder who can qualify for the contract. In any event, however, the liability of the surety is limited to the bid bond penalty.

Bid Spread

The difference in the bid price between the first, second and third lowest bidders.

Blue Sky Bonds

Bonds required of securities dealers to prohibit the sale of worthless securities.

Bona Fide

In good faith; without deceit or fraud; sincerely; real; genuine.


Generally speaking, it is an agreement whereby one party, called the surety, obligates itself to a second party, called the obligee, to answer for the default of a third party, called the principal.

Bond Penalty

The maximum amount for which a surety company may normally be held liable under the bond.

Bonding Company

Business authorized to issue bonds, usually an insurance company.

Bonding Penalty

The dollar amount for which a bond is issued.


The breaking or violation of a law, obligation, contract or standard, either by commission or omission.


Party representing a client to an insurance company or surety. The Broker/Agent must be licensed. In addition, they must have an agreement with each company they deal with.

Building Codes

Rules and regulations of governmental bodies defining standards that constriction in that jurisdiction must meet.

Buy Sell Agreement

An agreement between principals in a Partnership, LLC, or Closed Corporation that specifies the buy-out price of each Principal's share of the business.

By Laws

An organization's rules and regulations governing its members and regulating its affairs.

Cancellation Clause

A clause in a bond which permits the surety to terminate its future liability by serving written notice upon the obligee.

Certified Copy

Reproduction of a document that the authority, having custody of the original, signs and attests that it is a true, genuine and authentic copy.


Principal's personal traits (e.g., moral integrity, conscience) which surety uses to evaluate risks.


Tangible personal property, not real estate.


One Party's demand for something believed due from another party.

Co Surety

One of a group of sureties directly participating in a bond with obligations joint and several.


Anything of value pledged with the surety to secure it against loss by reason of default of the principal.

Combination Crime Policy

Fidelity policy covering against loss from employees' dishonest acts. It may exclude owners.

Commercial Blanket Policy

A blanket fidelity bond issued in a stated amount on all regular employees of commercial establishments covering against loss from employees' dishonest acts.


Money paid to an agent or broker for placing business to a surety or insurance company.


One appointed by a court to manage the estate of a person who has been declared incompetent. Also known as conservator or a curator.

Common Law

Unwritten legal principles evolved from judicial proceedings, court precedents, and customs; originally introduced into the United States from England.

Completion Bond

One covering performance of a construction project that names as an obligee a lender or similar party in a position to invoke the performance features of the bond for its benefit without an obligation to provide funds or to complete.

Comprehensive Dishonesty

A blanket policy written for commercial establishments containing five basic insuring agreements covering employee dishonesty, on-premises losses, off-premises losses, money order and counterfeit currency losses, and forgery losses.

Concessionaire Bond

Bond required by principals operating a business venture on publicly owned or controlled property.


The technical name of one of the four parts of a bond. The condition is not a qualification of coverage as with an insurance policy, but is the essence of the guarantee.

Consent of Surety

Many contracts require, and good practice dictates, that a surety’s consent be obtained in connection with final payment of retainage under a bonded contract, or any time that payment is being made in the face of potential claims or defaults. In this manner, the surety cannot be heard to later complain that contract balances, to which it looks for security, were released prematurely.


That which one party does or promises to do, done or promised by one party in return for another party's action or promise; the inducement to contract.

Contingent Commission

The percentage of insurer's profit on business written with a particular agent that is paid to the agent in addition to regular commission. Percentage of the re-insurer's profit (from business which the ceding company gives to the re-insurer), that the re-insurer gives back to the re-insured.

Contingent Liabilities

Potential liabilities that have not yet occurred.

Contract Bond

A guarantee of the faithful performance of a construction contract and usually the payment of all labor and material bills related to it. In those situations where two bonds are required - one to cover performance and the other to cover payment of labor and materials - the former is known as a performance bond, and the latter as a payment bond.

Contract Price

The whole sum of money which passes from the owner to contractor when final settlement is made between the two under the contract, the basis for the premium charge on most types of construction and supply contract bonds.

Corporate Bond

A certificate or evidence of a debt on which the issuing company or governmental body promises to pay the bondholders a specified amount of interest for a specified length of time, and to repay the loan on the maturity date; debt.

Corporate Surety

A corporation licensed under various insurance laws, which under its charter, has legal power to act as surety for others.


An entity or artificial person chartered by a government to act as a single enterprise although constituted of one or more natural persons. It is endowed with various rights and duties, including the capacity of succession, the right to form contracts, to sue and be sued, etc. The distinctive characteristics are limited liability of the owners (shareholders, who do not generally participate in management), easily transferred ownership rights, and continuous existence despite changes in ownership.

Costs Bond
A Court Bond required to be filed with a court, to guarantee payment of costs incurred by another party during litigation if ordered by the court.

Counter Replevin

Defendant's bond to recover property replevied. A Court Bond guaranteeing to redeliver property to a plaintiff and to comply with the court's decisions; upon giving bond the defendant regains possession of contested property.


A signature of a licensed domiciled agent or representative required by the laws of some states to validate the bond.

Court Bonds

A general term for all bonds that are required by a state, federal or local court.

Cumulative Liability

The aggregate amount of two or more bonds in behalf of the same principal (or in the case of fidelity or blanket bonds, in favor of the same obligee) filed in succession, where the succeeding bond does not extinguish the liability under the prior bond or the liability of the surety is the penalty of the bond times the number of years in force.

Custom Bonds

These bonds guarantee the payment of import duties and taxes, and compliance with regulations governing the entry of merchandise from foreign countries into the United States.


An amount which is to be "deducted" from any loss and which the insured agrees to bear personally.


The omission or failure to perform contractual duty.


Party against whom relief or recovery is sought in an action or suit.

Defendants Bond

Bonds given to defendants in litigation enabling them to regain possession of property, pending the outcome of a suit, or to suspend the execution of a judgment order or decree of a court while the defendant seeks reversal of an unfavorable judgment in a higher court.

Depositors Forgery Bond

Insurance issued to individuals (not lending institutions), protecting them against financial loss due to alteration or forgery of checks, drafts, promissory notes and the like.

Depository Bond

This guarantees repayment of monies deposited with a bank in the event of the failure or insolvency of the bank. While this is now a negligible line of surety business, it was once a large one. The Federal Deposit Insurance Corporation (FDIC) now guarantees the payment of bank deposits.

Depository Liability

A public official is liable for public funds which he/she deposits in a bank and cannot pay over because of insolvency or failure of the bank. In many states, statutes provide for the designation of depositories for public funds and for the furnishing of collateral security by such depositories. Such laws, if interpreted strictly, usually exempt the public official and his/her surety from liability for loss through failure of any of the designated and qualified depositories.

Design Build

A system in which a single entity providing all the services necessary to design and construct the project based upon the requirements established by the owner.


Release or removal of an obligation or liability. Court bonds for administrator, executor, guardian or conservator require a discharge to release the obligation of the bond.

Discharge Mechanics Lien

A lien against real estate may be filed for an amount claimed to be due for labor or materials furnished for the construction of a building or other improvement upon the property. Pending final determination of the owner's liability, the owner may discharge the lien by giving bond conditioned for the payment of any amount that may be found due to claimant with interest and costs.


Act of making known something previously unknown, or known to only a few.

Discovery Bond

A form of fidelity bond which covers against dishonest or fraudulent acts of employees, provided such loss is discovered any time after the bond becomes effective and before it is terminated, irrespective of when the dishonest or fraudulent acts were committed.

Discovery Period

Under certain bonds and policies, a provision is made to give the insured a period of time after the cancellation of a contract in which to discover whether a loss was sustained that would have been recoverable had the contract remained in force. This period usually varies from six months to three years. The period may be determined by statute; in certain bonds, it is of indefinite duration because of statutory requirement.

Dishonesty Insurance

A generic term describing fidelity bond coverage guaranteeing against loss caused by dishonest officers or employees of a commercial firm or by dishonest public officials or employees.


Part of a corporation, created for defined purpose, whose assets are not separate from those of the corporation; corporation is responsible for the division debts.


Stands for Durable Medical Equipment. This term is used to describe any medical equipment used by individuals or business. Including, but not limited to iron lungs, oxygen tents, Nebulizers, CPAP, catheters, hospital beds, and wheelchairs.

Earned Premium

The premium amount which would compensate the surety for the protection furnished for the expired portion of the term of the bond.

Effective Date

The date from which bond coverage is provided.

Employee Retirement Income Security Act

Federal legislation (U.S. Code Title 29, Chapter 18, associated Internal Revenue Code and miscellaneous provisions) adopted in 1974 that preempts state regulation of workers' medical and pension benefits. It imposes a fiduciary responsibility on persons who administer, supervise and manage private pension plans. It regulates plan funding, participation, vesting, termination, disclosure and federal tax treatment. Under ERISA, an insurance program has been established to guarantee that employees receive their pension benefits in the event that a pension plan is terminated.


A legal term for a documented claim against property, such as a mortgage.


A form attached to the bond to add to, alter, or vary its provisions. Sometimes called a rider.


To prohibit of forbid by legal action.


Fairness; equal treatment. State laws require insurance rates not to discriminate among consumers except according to valid underwriting criteria. Equity is accomplished by setting premium rates according to the expected losses for a group of similar insureds. Thus, all insureds with the same loss characteristics are classified together for underwriting and rating purposes.


A bond required by ERISA for all employees benefits plans covered by ERISA. The bond/policy is a Fidelity Policy and protects the monies of the Plan from theft. The Employee Benefit Plan is the named insured. ERISA requires that the bond be a minimum of 10% of the assets of the Plan with the maximum of $500.000.


An arrangement for a neutral third person (escrow agent or depositary) to hold funds paid by a contracting party until a specified event, when the funds are released to the other contracting party. In most real estate sales, the deed to the property and the earnest money are placed in escrow pending the fulfillment of other contractual conditions.

Excess Bond or Policy

Additional coverage over a primary bond or policy protecting against loss (usually do to dishonesty) applying only to loss above a specified amount.


A provision in a bond referring to perils or property not covered.


An individual who is appointed or specified in a will to execute its provisions.

Expense Ratio

The percentage of the premium used to pay all costs of acquiring, writing and servicing bond.

Experience Rating

The development of a premium for a specific policyholder by using that insured's own loss experience to apply a premium modification factor to the manual rate. If the policyholder's prior experience was favorable, a premium less than the manual rate results. If the experience was unfavorable, a higher premium results.


The date upon which a bond will cease to provide coverage unless previously cancelled.


The extent of exposure to loss, as measured by an exposure base, such as payroll, receipts, area, or units produced.

Facultative Reinsurance

A reinsurance arrangement by which individual risks are offered by the ceding insurer to a reinsurer, who has the right (faculty) to accept or reject each risk.


Money that is charged when a person loses a physical security issued to him/her and has to have a duplicate issued.

Fidelity Bond or Fidelity Policy

A bond covering an employer for a loss resulting from an employee's dishonest acts.

Fiduciary Bond

A type of judicial bond that guarantees the faithful performance of a fiduciary (e.g., an executor, guardian, or a trustee) as directed by the court.

Fiduciary Liability

These obligations are classified as bonds but are really insurance policies. These policies protect employee-benefit trustees from personal loss due to their error, omission, or wrongful act as it regards management of an employee-benefit plan of any kind.

Financial Guarantee Bond

Any judicial bond that guarantees the payment of money, such as an appeal bond, bail bond, plaintiff review bond, or sales tax bond.

Financial Institution Blanket Bond

A standard bond form of the Surety Association of America that covers a financial institution for dishonest or fraudulent acts of employees, inside and outside theft of property, and losses resulting from reliance upon a document later discovered to be counterfeited or forged.

Financial Statement

A written report summarizing the financial status of an organization for a stated period of time. It describes the organization's activities and resulting profit or loss, the flow of resources, and the distribution or retention of profits.

Fixed Penalty Bond

A bond penalty which is expressed in terms of stated and definite sum of money.

Forfeiture Bond

A bond where the full penalty is payable upon breach of condition regardless of the amount of loss or damage.


The making or alteration of a document with a fraudulent intent; counterfeiting or signing a false signature to a negotiable instrument.


Generally Accepted Accounting Principles

Game of Chance Bond

Bond required by the states of New York and Florida which guarantees that an entity sponsoring a contest will award the related cash/prizes to the legitimate contest winners.


Legal attachment and distribution of property to satisfy a debt.

General Average Bond

If ship and cargo have been in common peril, and cargo has been voluntarily sacrificed, bond is required on delivery of property saved to its owners, conditioned for payment of their shares of losses and expenses.

General Indeminity Agreement

An indemnity agreement is a contract entered into between indemnitor and surety in which indemnitor secures surety against loss.

General Partnership

A business organization composed of two or more co-owners comprised of any business organization, such as an individual, sole proprietor, LLC, partnership, corporation, etc. All partners are General Partners and do not have the privilege of limited liability.

Grain Wholesale Bond

A statutory bond given by grain warehouse owners to guarantee delivery of grain to farmers in accordance with the terms of a grain warehouse receipt and that the warehouse will have sufficient grain to cover all receipts.


Party undertaking that another party will pay or will perform; one who becomes secondarily liable for another's debt or performance; e.g., a surety is a guarantor.


Undertaking a collateral contract that another party will pay or will perform.


Court-appointed fiduciary caring for a minor or an incompetent person and administering an estate on his or her behalf.


Acronym for the Interstate Commerce Commission, now the National Surface Transportation Board.

ICC Broker

A person or company licensed by the National Surface Transportation Board (formerly ICC) to arrange transportation of merchandise by common carrier for a shipper.

ICC Broker Bond

A bond written in favor of the National Transportation Board (formerly ICC) with third party liability granted to common carriers and shippers guaranteeing delivery of goods and payment of monies due.

Immigrants Bonds

A class of Federal bonds covering aliens who legally enter the United States for temporary reasons, such as study or work, or for permanent reasons. The bonds are conditioned upon departure from the country as called for by entry permits and are required to ensure the aliens do not become public charges.

Income Tax Bonds

These are given to guarantee payment of Federal income taxes due or claimed to be due and which, generally, are in dispute.

Indefinite Term

Refers to a surety bond that has no expiration date.


Some casualty insurance policies provide that the insurer will indemnify or reimburse the insured for amounts the insured becomes legally obligated to pay, as opposed to making direct payment on behalf of the insured. Under this form of coverage, the insured must first make payment and then is reimbursed by the insurer.


A party entering into an agreement with a surety where they assume the principals obligation should the bond be in default.


Compensation for an incurred injury, loss or damage.

Indemnity Agreement

An insurance contract; an agreement to restore a party to its original financial position following an incurred loss or injury.

Indemnity Bond

A general term describing any bond which protects the obligee against direct loss which may arise as a result of failure on the part of a principal to perform.

Industrial Alcohol Bond

A bond required of manufacturers of industrial alcohol by the Bureau of Alcohol, Tobacco and Firearms (ATF). The bond guarantees that the alcohol will be manufactured and distributed in accordance with Federal regulations, and that all taxes will be paid.


A court order that restricts or prohibits an act, either for a limited time or permanently.

Injunction Bond

1. A bond required of manufacturers of industrial alcohol by the Bureau of Alcohol, Tobacco and Firearms (ATF). The bond guarantees that the alcohol will be manufactured and distributed in accordance with. A bond from the Plaintiff may be required by the court of equity to indemnify the Defendant against loss if the final decision of the court holds that the injunction should not have been issued.

2. A bond from the defendant allows for the dissolution of the injunction by guaranteeing the Plaintiff against any loss incurred by the Plaintiff as a result of the act or acts originally prevented.

Injunction Defendant Bond To Dissolve

One of two forms of injunction bonds. As the result of a judicial process, an order dissolving an injunction may be issued conditioned upon the defendant providing a bond of this type, guaranteeing to pay such damages as the plaintiff may sustain as a result of the performance of the act or acts originally enjoined.

Injunction Plaintiff Bond To Secure

One of two forms of injunction bonds. As the result of a judicial process, an order granting an injunction may be conditioned upon the plaintiff furnishing a bond to indemnify the defendant against loss in the event it is finally decided that the injunction should not have been granted.


Written document, formal or legal: e.g contract, deed, will, bond, etc.

Insuring Clause

The section of an insurance contract containing the obligation of the insurer to pay covered claims, subject to specified conditions and exclusions.


Person dying without leaving a valid will.

Joint and Several Liability

Liability arising from a contract or from a tort that applies to the responsible persons either separately (severally) or in combination (jointly), at the injured person's option. If a group of persons who default on an obligation or cause a loss are held jointly and severally liable either by terms of the contract or by operation of law, the claimant may sue either the group or any one member for the entire amount owed. This is a way to compensate an injured person if, for example, one or more liable persons are bankrupt or flee the jurisdiction.

Joint Venture

An association of two or more individuals or companies to engage in a limited business transaction. Profits and losses are usually shared according to an agreed formula.

Judicial Bonds

Bonds in judicial proceedings are filed by parties engaged in litigation to procure the benefits of relief afforded by law, such as Replevin, Attachments, Garnishments, etc. These bonds guarantee to the opposing party payment of the opposing party's costs and damages in the event the Court's judgment is in favor of that opposing party.

Labor and Material Bond

A bond that guarantees an owner (or general contractor) at a construction site that a contractor (or subcontractors) will pay for labor and material to be supplied. It protects the owner or contractor against liens from subcontractors, suppliers or laborers who are not paid.

Lease Bond

Guarantees that the party leasing property will make payments and fulfill other terms of the lease.

Letter of Credit

A financial instrument issued by a bank that guarantees payment of a customer's drafts up to a stated amount. An LOC confers the bank's credit upon the holder. LOCs can be either "revolving" (periodically renewed for a specified amount) or "performance" (guaranteeing performance depending upon the beneficiary's needs).


Legally enforceable obligation.

License Bond

A bond guaranteeing that a person who has been issued a license will comply with the laws, regulations and ordinances associated with the issuance of the license.

License and Permit Bonds

License and Permit bonds take on many shapes and sizes. Most of these obligations are brought about by a statute of some kind for the protection of the general public. An example is the Commercial Contractor's License bond in The State of Arizona, USA. In this bond, the principal (contractor) promises to build all buildings in accordance to statutory building codes. The obligee is The State of Arizona and the people in the state who may contract for the contractor's services.


A claim or encumbrance on property by a creditor or a service provider pending payment of a debt; a creditor's conditional interest in property taken as security for a debt, or any similar right by operation of law.

Limit of Liability

The maximum amount an insured may collect, or for which an insured is protected, under the terms of a policy.

Limited Partnership

A partnership consisting of one or more limited partners (whose liability for partnership debts is limited to the amount invested) and one or more general partners (whose liability for partnership debts is unlimited). To create a limited partnership, a certificate must be filed with a state official. A limited partner may lose the shield of limited liability if he or she actively participates in the management of the business.

Line of Credit

A prearranged borrowing limit established by an individual or organization with a financial institution.


Assets capable of being readily converted into cash.


The attempt to resolve a dispute through proceedings in a court of law; a lawsuit.

Lost Instrument Bond

Bond that guarantees against damages caused by reissuing a lost instrument or security. (e.g. money order)

Manual Rate

Rates contained in a manual published by an insurer or rating organization for a unit of insurance.

Mechanics Lien

Charge on real property in favor of parties supplying labor, materials or professional services for a construction project, for value of labor, materials or professional services they supply; the lien prevents owner from obtaining clear title until the claim is settled. The right to file a lien is a legal right in the U.S.A and Canada, except as prohibited, as may be the case on public works.

Mechanics Lien Bond to Discharge

A lien against real estate may be filed for an amount claimed to be due for labor or materials furnished for the construction of a building or other improvement upon the property. Pending final determination of the owner's liability, the owner may discharge the lien by giving bond conditioned for the payment of any amount that may be found due to claimant with interest and costs.

Miller Act

The Miller Act was enacted by Congress in 1935. This law replaced the Heard Act of 1894 which required contractors to obtain surety bonds on public works. The Miller Act requires federal government to require performance and payment bonds on its construction projects and extends the payment bond's protection to certain subcontractors and suppliers. Most public bodies such as states, cities, and municipalities follow a bonding requirement similar to the Miller Act (called "the little Miller Act").

Minimum Premium

The lowest premium amount for which an insurance company will issue a policy or will include a particular coverage in a policy.

Miscellaneous Bonds

A general term used to describe license and permit bonds.

Miscellaneous Indemnity Bonds

Bonds which do not fit any of the well recognized categories. Bonds in which the obligation is a promise to pay contingent on some event occurring.


The obligee is the entity (person, firm, corporation, government) protected by the surety bond against loss. The surety bond 'runs to' the obligee and the obligee has the ability to set the language of the surety bond.

Payment Bond

A bond which promises to pay some or all of the persons who provide material, labor, or services for the execution of a contract.

Performance Bond

A bond which promises that the terms of a contract, or some of them, will be performed by the Principal/Contractor.

Post Closure Surety Bond

This is a type of Environment Bond that is required by the government and guarantees the area will be place in a proper state, when job is finished.


The premium is the cost that you pay for the bond to be issued.


The principal is the entity obligated, with the surety, to the obligee.

Probate Bond

All types of bonds required of persons appointed to positions of trust by the court, such as Guardians, Executors, Administrators, Receivers, etc. These bonds guarantee the faithful performance of duties and an equitable accounting for property received and distributed.

Reclamation Bond

Bond that guarantees that the principal will reclaim land disturbed by mining operations.


The renewal is the premium due for the bond for each additional term or license period.

Release of Lien Bond

Secures owner of realty against loss from liens against his property, e.g, unpaid bills for work on owner's property.

Self Insurer Bonds

These bonds arise when an employer decides to self-insure a large portion of potential workmen's compensation exposure. The bond guarantees that the employer (principal) will pay workmen's compensation benefits to any worker injured during the time period in which the bond is in force.

Subdivision Bonds

Subdivision bonds are different from more common performance bonds used for construction projects. With subdivision bonds, the owner of the project provides bonds to the public agency to guarantee the installation of improvements that will ultimately be dedicated to the public but paid for by the owner/developer.

Supply Bond

Bond that guarantees faithful performance of a contractor to furnish supplies or materials.

Surety Bond

An agreement providing for monetary compensation should there be a failure to perform specified acts within a stated period.

Suretyship Bond

A suretyship bond is a contractual agreement between three parties: (i) the principal, (ii) the obligee, and (iii) the surety. Through this agreement, the surety agrees to make the obligee whole if the principal defaults in his performance of an obligation to the obligee. The contract is formed so as to induce the obligee to contract with the principal, i.e., to demonstrate the credibility of the principal.

Tax Bond

Bond that guarantees that the principal will pay taxes (fuel, sales tax, etc.).

Utility Bond

Bond that guarantees that the principal will pay utility bills as they come due.


An opening or opportunity.