Surety Bond Glossary

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A person responsible for managing the assets of a deceased person. This individual is generally appointed by a probate court. This person may be a family member, like a surviving spouse, or an executor named in the will. The first duty of the administrator is to supply the probate court with an inventory of the debts and assets of the departed.

Alcohol Bond

Also known as a Liquor License Bond or Alcohol Tax Bond, an Alcohol Bond is a prerequisite to obtaining a liquor license. It is a compliance bond that guarantees that the bond holder will operate within the applicable laws and statutes and pay all taxes and fees required by the state

Appeal Bond

Also called a Supersedeas Bond, an Appeal Bond is used when appealing to a higher court to reverse a ruling. It discourages frivolous appeals by guaranteeing monetary compliance.


A paper or online form requesting an applicant's information. Collected information is used to underwrite applications.

Auto Dealer Bonds

An Auto Dealer Bond, or Car Dealer Bond, is a licensing requirement for individuals that wish to sell or broker vehicles. It ensures that they comply with all laws, regulations, and ethics surrounding the profession.

Balance Sheet

A financial statement that summarizes a company's assets, liabilities, and equity at any given time. Also referred to as a statement of financial condition.

Bankruptcy Trustee Bonds

A court bond that protects the beneficiaries of a bankruptcy. It ensures that the trustee will uphold all their responsibilities as ordered by the court.

Bid Bond

A Bid Bond is a requirement for contractors bidding on public or government construction projects. This bond assures the project holder that the contractor has the cash flow required for the project and can complete it at the bided price.

Blanket Bonds

A Blanket Bond is a fidelity bond that covers losses caused by employee theft and dishonesty. It protects the employer and its clients. 


A BMC-84 Bond, also known as a Freight Broker Bond, is a licensing bond required for freight brokers to legally operate. It ensures that they will comply with all laws and legal obligations tied to the profession.

Bond Penalty

The bond penalty, or bond amount, is the maximum compensation a bond can pay out.


An individual or company that negotiates and obtains a bond on behalf of a client. They act as an intermediary between the client and surety.


The maximum bond amount that a surety is able to write.


An allegation that the bond holder (principal) has failed to comply with the terms outlined in the bond agreement. It refers to a claim made against a bond.


Someone that makes a claim against a bond to recuperate losses.

Contract Bond

A Contract Bond assures that a contractor will perform and deliver all contracted work and/or pay subcontractors, workers, and suppliers.

Contractor License Bond

A Contractor License Bond is a prerequisite needed to get licensed by the Contractor State License Board (CSLB) in order to legally work as a contractor.

Court Bond

A Court Bond ensures an individual's responsibilities will be fulfilled as ordered by law, state, or federal courts. These bonds are required for a variety of circumstances which commonly include appealing a court decision, becoming a legal guardian of a minor/disabled individual, or operating as a fiduciary of an estate.


Financial recuperation sought by a claimant to cover losses.


The accused party in a court case—the opposing party to a plaintiff.

Employee Retirement Income Security Act (ERISA Bonds)

An ERISA Bond protects participants and beneficiaries of employee benefit plans. It helps guard against acts of fraud, dishonesty, and general mismanagement of plan funds by the fiduciary—it is a type of fidelity bond.


An individual appointed to execute the wishes of a deceased person as outlined in their will.

Fidelity Bonds

A Fidelity Bond protects an employer and its clients from dishonest employees who may commit theft, embezzlement, forgery, or other acts resulting in financial loss.

Fiduciary Bond

A Fiduciary Bond is required by a probate court when an individual is named as the fiduciary or executor. It guarantees they will act in the best interest of the heirs of an estate.

Freight Broker Bond

A Freight Broker Bond, also known as a BMC-84 bond, is a licensing bond required for freight brokers to legally operate. It ensures that they will comply with all laws and legal obligations tied to the profession.

Funds Control

Funds control, also known as funds administration or escrow, is a tool bond underwriters use to provide Performance Bonds and Payment Bonds to contractors that may not regularly qualify for bonding.


A guarantee, often in the form of an indemnity agreement, that the bond holder will reimburse the surety in the event of a bond claim.

License and Permit Bonds

License and Permit Bonds are needed to obtain certain professional licensing and are used to protect the public. Requirements vary throughout the country based on an applicant's industry and location (state, city, county).

Maintenance Bonds

Also known as a Warranty Bond, a Maintenance Bond is a type of construction bond that ensures projects are free of defects for a specified amount of time. This includes both faulty workmanship and materials. These bonds are needed when performing work on public projects.


A person that is under the legal age of majority.

Miscellaneous Bond

Bonds that serve a unique purpose and, therefore, do not fall under any of the better-known bond categories.

Name Schedule Bonds

A fidelity bond that covers only those employees named on the bond, with each having a specific amount of coverage. It reimburses the company for losses due to theft or fraud committed by the named employees.

Notary Public Bonds

A bond required by statutes to protect the public from unlawful or unethical actions of notary publics.


The entity requiring a person to get bonded—usually a government organization or regulatory body. It is one of the three parties involved in a bond.

Open Penalty

A term to describe a bond with unlimited coverage. In these cases, the surety also has unlimited liability.


A statute or regulation generally set forth by the municipal government.

Payment Bonds

A Payment Bond ensures that all subcontractors, laborers, and suppliers are paid for the work they complete on a contract. It is commonly paired with a Performance Bond.


A penalty, or bond amount, refers to the size or limit of a bond. It is the maximum amount a bond can pay out.

Performance Bond

A Performance Bond guarantees that a contractor will complete a job per the contract's specifications. It protects the project owner from financial loss if the contractor defaults on contractual obligations.


The one that files an action or suit in a court of law—the opposing party to a defendant.


The cost to obtain a bond—a small percentage of the total bond amount. For example, a $10,000 bond will generally cost a flat rate of $100 -$10,000.

Public Official Bonds

A Public Official Bond covers the losses resulting from the negligence or mistakes of a bureaucrat or other public figure.


A percentage of the bond amount that determines the premium. Underwriters will assess how high a risk an applicant is to derive their rate.

Reclamation Bonds

A bond that ensures any land altered or tampered with during the mining process is restored to its original state once the work is complete.


Insurance for insurers, such as surety companies. It relinquishes some of the liability to another company to safeguard against unexpected losses. 


A rider or bond rider is a form used to make changes to an existing bond. These changes may include name, address, business structure, bond term, or total bond amount.

Self-Insurers Retention Plan Bonds

A bond that is commonly paired with general liability coverage, worker's compensation insurance, or other coverage. It is used when these types of coverage are limited or unaffordable.

Small Business Administration (SBA)

An agency that helps entrepreneurs and small businesses in the United States. This includes helping businesses secure bonding when they are not  able to on their own due to bad credit or other barriers.

Supply Bonds

A Supply Bond is a type of construction bond that guarantees a supplier will deliver all materials specified in a given contract.


A company or individual that guarantees the actions or performance of another. In the case of bonds, a surety backs its guarantee financially.

Surety Bonds

A Surety Bond guarantees the completion of a task or obligation. Each one includes a legally binding contract between three parties: the principal (bond holder), the obligee (entity obligating the bond), and the surety (company underwriting the bond).

Tax Bond

A Tax Bond, also known as a sales tax bond, guarantees that owed taxes will be paid (state or federal). It is a requirement for businesses operating in certain areas.

Treasury Listing

A list of sureties eligible to issue bonds on federal contracts and the maximum bond amount a surety is allowed to write for said bonds. It is published by the U.S. Department of the Treasury and updated annually.

Trustee Bonds

A bond for a person named to manage the assets and debts of another individual or business. This person, known as a trustee, is appointed by a will or the court.


An individual that determines a bond applicant's risk level to determine if they qualify for a bond/their bond rate. To do so, they may assess credit score, character, past bond history, company history, and financial documents.

Utility Bond

A utility bond stands as a guarantee that the bond holder will pay their utility bills.

Work-On-Hand Reports

A financial report that details a contractor's work-in-progress. Also commonly called a work-in-progress report.

Workers' Compensation Self-Insurers Bond

This bond is an alternative to workers' compensation insurance. It guarantees that a worker injured on the job is compensated by their employer.