EZ Surety Bonds Glossary:

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What is an Administrator or Administratrix?
  • An Administrator or an Administratrix is an individual appointed by a probate court to fulfill a fiduciary responsibility to handle and distribute as appropriate the assets of an estate when no will was left by the deceased.
What is an Administrator Bond?
  • An Administrator Bond is a bond for a person or entity legally vested with the right of administration of an estate.
What is an Administrator De Bonis Non?
  • An Administrator De Bonis Non is an individual appointed by a probate court to succeed an administrator who has died, resigned or been discharged before the administration is complete.
What is an Administrator Pendente Lite?
  • An Administrator Pendente Lite is an individual appointed to preserve the assets of a descendant’s estate where there is a contest of the will or other circumstances which delay qualification of an executor if there is a will, or the appointment of an administrator if there is no will.
What is an Administrator, Cum Testamento Annexo?
  • An Administrator, Cum Testamento Annexo is an individual appointed by a probate court to fulfill the fiduciary responsibility as above when a will exists but does not name an executor or if the court deems the executor named as unqualified.
What is an Administrator, Special or Temporary?
  • An Administrator, Special or Temporary is an individual appointed by the probate court to protect the assets of an estate when there is a contesting will or other delay in the appointment of an administrator of executor.
What is an Admiralty Law?
  • An Admiralty Law is a distinct set of laws overseen by courts specifically established to handle procedural matters relating to Maritime Law.
What is an Advance Payment Bond?
  • An Advanced Payment bond is a bond in which the repayment is guaranteed to be provided when moneys have been advanced as prepayment for construction or supply activities.
What is an Agent?
  • An Agent is a licensed independent agent authorized to conduct the transaction of Fidelity and Surety Bond business.
What is an Aggregate Liability?
  • An Aggregate Liability is a clause contained in many commercial surety and fidelity bonds to restrict the surety company's liability to the penalty of the bond. This limit will apply even if claims presented exceed the bond penalty.
What is an Alcoholic Beverage Tax Bond?
  • An Alcoholic Beverage Tax Bond is a license bond required by statute or regulations which control the manufacture, storage and/or sale of alcoholic beverages.
What is Annual Accounting?
  • Annual Accounting is a listing of assets and liabilities of an estate. This document is frequently required by the probate court on an annual basis.
What is an Annual Term?
  • An Annual Term is a bond written for a defined period of one year and which either expires at the end of that one year period or requires the execution of a new bond or continuation certificate.
What is an Appeal Bond?
  • An Appeal Bond is a court bond filed by a party in a litigation matter with the purpose of holding off on execution of a judgment against that party while the matter is referred (appealed) to a higher court. The bond takes the place of the judgment and guarantees the payment of the judgment in the event the appeal is not successful.
What are Applications?
  • Applications are forms used to collect information to underwrite a risk.
What are Attachment Bonds?
  • The legal process of taking possession of a defendant's property when the property is in dispute.
Attachment Bond (Defendant)
  • Bond to Discharge Attachment. A defendant may furnish a bond to discharge the attachment rights. The bond will stand in place of the property rights and indemnify the plaintiff against loss or damages resulting from defendants failure to preserve the value of the property in question.
Attachment Bond (Plaintiff)
  • Attachment of property is a process of taking the property rights from the defendant prior to the actual litigation of the plaintiff's claim as security in anticipation of a judgment against the defendant. The bond indemnifies the defendant to ensure the return of the property rights or against any damages suffered if the plaintiff's rights are not upheld by the court.
What is Attesting?
  • To Attest is to bear witness to; to affirm to be true or genuine; to certify.
What is an Attorney In Fact?
  • An Attorney in Fact is an individual designated by the surety company to act on its behalf in executing bonds and other documents which bind the Company's resources to support the bond obligation.
What is BADA?
  • BADA is an acronym representing Bond Agent Desktop Automation.
What is a Balance Sheet?
  • A Balance Sheet is a financial statement listing assets, liabilities and net worth.
What are Bank Depository Bonds?
  • Bank Depository Bonds are bonds which cover the deposit of public funds.
What are Bankruptcy Trustee Bonds?
  • Bankruptcy Trustee Bonds are bonds which provide protection to the beneficiaries of the bankruptcy action that the bonded trustees, appointed in a bankruptcy proceeding, will perform their duties and handle the affairs according to the rulings of the court.
Common types of bankruptcies are:
  • Chapter 7: calls for the "liquidation" of a business and allows for the sale of the assets to pay outstanding debts.

  • Chapter 11: calls for the "reorganization" of a business and the debtor remains in possession of the assets after the filing of a plan for the reorganization.
What are Bid or Proposal Bonds?
  • Bid or Proposal Bonds are used by owners to pre-qualify contractors submitting proposals on contracts. The coverage provided by a Bid or Proposal Bond is that the bidder, if awarded the contract within the time stipulated, will enter into the contract and furnish the prescribed Performance and Payment Bond(s). Default will ordinarily result in liability of the surety not to exceed the dollar value set forth in the bond for the difference between the amount of the principal's bid and the next low bidder who can qualify for the contract.
What is a Binder?
  • A Binder is a temporary agreement which provides coverage until a policy can be written or delivered. A Binder is not applicable to Surety bonds.
What are Blanket Bonds?
  • Blanket Bonds are bonds which protect against dishonesty of all of the employees of an entity, up to the stated amount of the bond.
What are Blanket Position Bonds?
  • Blanket Position Bonds are bonds which protect against dishonesty of each of the employees of an entity stated on the bond, up to the stated amount of the bond.
What are Blanket Public Official Bonds?
  • Blanket Public Official Bonds are bonds which cover all public employees of the public entity stated on the bond, up to the stated amount of the bond.
What are Blanket Position Public Official Bonds?
  • The Blanket Position Public Official Bond covers each public employee of the public entity stated on the bond, up to the stated amount of the bond.
What is a Blue Sky Bond?
  • A Blue Sky Bond is a bond that guarantees the bond principals will comply with laws and regulations applying to the sale of securities by dealers.
What is a Broker?
  • A Broker is a licensed person or organization paid by an insured to look for insurance on the insured's behalf.
What are By-laws?
  • By-laws are a set of an organization's rules and regulations governing its members and regulating its affairs.
What is a Cancellation Clause?
  • A Cancellation Clause is the condition included in a bond that allows the surety, principal or obligee to cancel the obligation with notice to the other parties. Generally the cancellation requires a certain number of days advance notice.
What is a Cancellation Date?
  • The Cancellation Date is the date that a bond is closed by means of release from obligee or date established by proper cancellation notice.
What is Capacity?
  • Capacity is a term that refers to the size of a bond which a surety is able to write.
What is Certiorari, Writ of?
  • Writ of Certiorari may be issued by Superior Courts for the purpose of reviewing a matter that was previously heard by a lower court or administrative body. This bond is essentially the same as an appeal bond.
What is Character?
  • Character describes the principal's personal traits (e.g., moral integrity, conscience) which surety uses to evaluate risks.
What is Chattel?
  • Chattel is tangible personal property, not real estate.
What is a Claim?
  • A claim is a party's demand for something believed due from another party.
What is a Claimant's Bond?
  • A Claimant’s Bond is issued when a party may claim to be the owner of property subject to dispute, but is not a party to the litigation action. The bond requirement is similar to the attachment process, in that it guarantees return of the property to the jurisdiction of the court or indemnifies against loss or damage to the property.
What is a Co-Fiduciary?
  • A Co-Fiduciary is a party who acts jointly with another party to fulfill the fiduciary responsibilities of a probate matter. The co-fiduciary may be an individual party, often an attorney, or may be a business entity such as a bank.
What is a Co-Surety?
  • A Co-Surety refers to an instance in which more than one surety company is providing guarantee on the same bond. The guarantee may be joint and several, but more commonly is subject to a specific stated limit for each surety.
What is Collateral?
  • Collateral is the security rights to property pledged to support acceptance of a bond submission. Collateral commonly takes the form of an irrevocable letter of credit from a bank or an assignment against bank accounts.
What is Collusion?
  • Collusion is the actions of two or more employees acting together to cause a loss against an employer under a fidelity bond.
What are Commercial Bonds?
  • Commercial Bonds is a general classification of bonds that refers to all bonds other than contract and performance bonds. Commercial Bonds cover obligations typically required by law or regulation. Each bond is unique to the circumstances at hand.
What are Commercial Blanket Bonds?
  • Commercial Blanket Bonds are bonds which provide a single amount of coverage to cover dishonest acts of employees, regardless of the number of employees involved in the loss. In other words, this type of bond covers all employees to the amount stated on the bond.
What is Commercial Crime Coverage?
  • Commercial Crime Coverage is written for mercantile and governmental entities with Fidelity as the base coverage, with options to add various forgery and crime options.
What is Commission?
  • Commission is the money paid to an agent or broker for directing business to a surety or insurance company.
What is a Commissioner of Insurance?
  • The Commissioner of Insurance is the individual who is the designated head of the state department responsible for overseeing and regulating all matters relating to the conduct of the business of insurance in that specific state.
What is Common Law?
  • Common Law is a set of unwritten legal principals evolved from judicial proceedings, court precedents and customs; originally introduced into the United States from England.
What is a Completion Bond?
  • A completion Bond is a bond 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 his or her benefit without an obligation to provide funds to complete.
What is a Condition?
  • A condition is a provision defining the obligation of insured and insurer to each other, breach of which may void the contract; clause in a contract or agreement modifying personal obligations or terms of the agreement. A condition is a also the technical name of part of surety bond defining the guarantee.
What is a Conservator (Committee)?
  • A Conservator Committee is a party who has been appointed by a probate court to handle the fiduciary responsibility of managing the estate of a party who has been declared incompetent by the court.
What are Conservator Bonds and Guardian Bonds?
  • A Conservator Bond or Guardian Bond is for a person, official, or entity designated to take over and protect the interest of an incompetent or minor.
What are Contingent Liabilities?
  • Contingent Liabilities are liabilities that may occur, but have not yet occurred.
What is a Continuation Certificate?
  • A Continuation Certificate is a form that documents that a bond obligation is being continued for another term. Use of this form is equivalent to issuing a new bond for the new term.
What are Contract Bonds?
  • Contract Bonds is a general classification of bonds that provide financial security and construction assurance on building and construction projects by assuring the project owner (obligee) that the contractor (principal) will perform the work and pay certain subcontractors, laborers, and material suppliers.
What is Conversion?
  • Conversion is the act of taking property that belongs to another and is in the care of a second party, to improper use or representation of ownership by the second party.
What is a Corporate Surety?
  • A corporate Surety is a company licensed to conduct surety business under the insurance laws of all mainland states except California, Louisiana and Mississippi.
What is a Corporation?
  • A Corporation is an artificial, legal entity existing separate from its individual stockholders; legal "personality" with powers and duties defined in the corporation's character.
What is a Costs Bond?
  • A Costs Bond is a bond which guarantees the payment of costs associated with the litigation matter. These costs may include filing costs, clerk (or other parties designated to act on behalf of the court), fees, etc.
What is a Counter Replevin?
  • A Counter Replevin is an action undertaken in court. A plaintiff may file a replevin action to restablish possession rights to specific property. The purpose of this bond is to allow the defendant to retain possession of the specified property until the court has ruled on the merits of the action and guaranteeing delivery of the property or indemnifying against loss or damage to property while retaining possession.
What is a Countersignature?
  • A countersignature is an additional signature required by some states. The insurance laws of some states may require that a licensed resident insurance agent also sign the bond in addition to the originating agent if the originating agent is not a resident agent in that state.
What are Court and Probate Bonds?
  • Court and Probate bonds, also referred to as fiduciary bonds or judicial bonds, secure the performance on fiduciaries' duties and compliance with court order, e.g. administrators, executors, guardians, trustees of a will, liquidators, receivers, and masters. Judicial proceedings court bonds include injunction, appeal, indemnity to sheriff, mechanic's lien, attachment, replevin, and admiralty.
What is a Cumulative Liability?
  • Cumulative Liability language may be contained within the conditions of a specific bond form or established by a statute or regulation governing the purpose of the bond. This type of clause creates a much greater risk to the surety by stating that the bond applies to each term the bond is in effect which yields liability equal to the number of terms times the bond penalty.
What is a Customs Bond?
  • A Customs Bond is a sub-classification of license type within BADA. These bonds are required when a company is bringing goods into the USA from a foreign market. The obligation includes payment of applicable taxes and complying with any regulations regarding proper storage and transfer within the USA.
What are Damages?
  • Damages refer to monetary measure of harm or injury asserted by a claim.
What is a Deductible?
  • The Deductible is the designated amount of a reported loss that the bond principal shall bear before the obligation of surety is subject to enforcement.
What is a Default?
  • A Default is the failure to fulfill the terms and conditions of the bond principal's obligation to obligee.
What is a Defendant?
  • A Defendant is the person or entity being accused in a court case.
What are Defendant Bonds?
  • Defendant Bonds are bonds which counteract the effect of the bond that the plaintiff has furnished. They often require the posting of collateral in order to be written.
What is a Discharge Attachment?
  • Discharging Attachment is an instance in which a defendant may furnish a bond to discharge the attachment rights. The bond will stand in place of the property rights and indemnify the plaintiff against loss or damages resulting from defendant’s failure to preserve the value of the property in question.
What is a Discharge Mechanic's Lien?
  • A Discharge Mechanic’s Lien is an instance in which the defendant may furnish a bond to discharge the attachment rights. The bond will stand in place of the property rights and indemnify the plaintiff against loss or damages resulting from defendant’s failure to preserve the value of the property in question.
What is the Discovery Period?
  • The Discovery Period is the period of time within which a claim may still be presented after cancellation of the bond if the loss occurred during the time the bond was in effect but was not discovered until after cancellation. This time period may be defined by the terms of the bond or by statute or regulation.
What is Dishonesty?
  • Dishonesty is a common term for coverage provided under a fidelity bond.
What is Earned Premium?
  • Earned Premium is the amount of premium that the surety is entitled to, based on the portion of the bond term that has expired by passage of time or cancellation of bond.
What is the Effective Date?
  • The Effective Date is the date which establishes the beginning of surety's obligation under the bond.
What is Embezzlement?
  • Embezzlement is the improper taking by employee of property belonging to an employer.
What is the Employee Retirement Income Security Act?
  • The Employee Retirement Income Security Act is a piece of federal legislation enacted in 1974 that created a requirement for a bond to be posted, in the amount of ten percent of the funds, on the fiduciary of pension funds and profit-sharing plans.
What is an Endorsement?
  • An Endorsement is an amendment to an existing bond term usually accomplished by means of a rider.
What is to Enjoin?
  • To Enjoin is to prohibit or forbid by legal action.
What is Equity?
  • Equity is the Pecuniary value of property exceeding claims and liens against it. Justice administered according to fairness.
What is ERISA?
  • ERISA is an acronym representing the Employee Retirement Security Act, which requires that trustees of employee benefit plans subject to the act provide a fidelity bond.
What are Errors and Omissions Insurance?
  • Errors and Omissions Insurance is a policy that provides coverage for an insured in the event of unintentional mistakes. Errors and Omissions Insurance, commonly referred to as EandO, covers damages arising out of the insured's negligence, mistakes, or failure to take appropriate action in the performance of business or professional duties.
What is Escrow?
  • Escrow is the holding by an independent party of assets in safe custody pending fulfillment of terms or conditions allowing for release of the assets to one of the parties.
What is Exclusion?
  • Exclusion is the wording in a bond form which states that coverage does not apply to certain perils, property, or if stated conditions are not maintained.
What is an Executor?
  • An Executor is a party specifically named by will to fulfill the fiduciary responsibilities of handling a probate estate.
What is an Executor Bond?
  • An executor bond is a bond for the person or entity appointed to execute a will.
What is an Expiration Date?
  • An Expiration Date is the date which establishes the end of coverage obligation provided under the bond.
What is Exposure?
  • Exposure is the potential loss from a hazard, contingency, or condition.
What is Faithful Performance?
  • Faithful Performance is a term usually associated with public official bonds. Faithful Performance provides coverage in addition to fraudulent acts, for the principal's responsibility to perform duties of designated position as established by law, regulation or by-law of obligee to whom the bond is provided.
What are Fidelity Bonds?
  • Fidelity Bonds are bonds designed to protect against dishonesty. Generally, the bond protects against dishonesty of employees. These bonds cover losses arising from employee dishonesty and indemnify the principal for losses caused by the dishonest actions of its employees.
What is Fidelity, Blanket?
  • Blanket Fidelity is a fidelity bond written to cover an employer against fraudulent acts by all employees unless specifically excluded by endorsement.
What is Fidelity, Blanket Position?
  • Provides same coverage for employer against fraudulent acts of all employees. The difference is that if it can be proved that two or more identifiable employees acted in collusion to cause a loss, coverage up to the stated limit of the bond may be applied per employee.
What is Fidelity, Individual or Schedule?
  • Individual or Schedule Fidelity is a fidelity bond that protects an employer against fraudulent acts of specific individuals identified by name.
What is Fidelity, Position or Schedule?
  • Position or Schedule Fidelity is a fidelity bond that protects an employer against fraudulent acts of specific employees identified by position rather than name.
What is Fidelity, Third Party?
  • Third Party Fidelity is a Fidelity bond designed by the surety to provide coverage to a third party client of our designated insured. Coverage is provided for fraudulent acts of an employee that cause a loss to the client and for which the employer would be held liable under the bond conditions.
What is a Fiduciary?
  • A Fiduciary is a person who is appointed to act in the best interests of another. A fiduciary is a person or entity appointed by the court to handle the affairs of persons who are not able to do so themselves. Fiduciaries are often requested to furnish a bond to protect against a lack of faithful performance of their duties.
What are Fiduciary Bonds?
  • Fiduciary Bonds are bonds which protect against dishonest accountings and a lack of faithful performance of duties by administrators, trustees, guardians, executors, and other fiduciaries. Fiduciary bonds, often referred to as probate bonds, are required by statutes, courts, or legal documents for the protection of those on whose behalf a fiduciary acts. They are needed under a variety of circumstances, including the administration of an estate and the management of affairs of a trust or a ward.
What is a Financial Guarantee Bond?
  • A Financial Guarantee Bond is an indemnity bond which provides guarantee of up to the stated sum of money as damages if the terms of the bond obligation are not complied with.
What is a Fixed Penalty?
  • A Fixed Penalty is a stated specific amount of maximum penalty as opposed to an Open penalty bond.
What is a Forfeiture Bond?
  • A forfeiture Bond is any bond which requires the payment of the entire bond penalty as damages even if the actual loss is less than the stated amount.
What is Forgery?
  • A Forgery is a fraudulent alteration of a written instrument. Coverage may be added to a Commercial Crime policy.
What is a Forthcoming Bond?
  • A Forthcoming Bond is a Bond that guarantees return or redelivery of property if so ordered by a court or payment of damages.
What is Funds Control?
  • Funds Control is a method of taking control of a bonded project's cash flow to ensure subcontractors and suppliers will be paid appropriately. This method may be used when the contractor would not otherwise qualify for a bond.
What is the Fully Earned Premium?
  • The Fully Earned Premium is the premium which is 100% earned regardless of the period of time a bond was actually in force. Usually applies to term bonds, minimum premiums or contract bonds.
What are Immigrants Bonds?
  • Immigrant Bonds are 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, i.e., to become United States citizens. Such obligations 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.
What are Income Tax Bonds?
  • Income Tax Bonds are given to a guarantee payment of Federal income taxes due or claimed to be due.
What is an Indefinite Term?
  • Indefinite Terms exist in instances in which specific bonds have no fixed termination date. They may contain an anniversary date for billing, but may continue until proper release or cancellation takes place.
What is Indemnification?
  • Indemnification is the act of holding another harmless in the event of a loss.
What is an Indemnitor?
  • An Indemnitor is a party who signs a formal agreement with the surety to hold the surety harmless for loss or expense incurred by principal's failure to fulfill its obligation to obligee.
What is an Indemnity Agreement?
  • And Indemnity Agreement is a contract entered into between indemnitor and surety in which indemnitor secures surety against loss, cost or expense surety may sustain on bond on behalf of itself or another.
What is an Indemnity Bond?
  • An Indemnity Bond is a term applied to many miscellaneous bonds that guarantee an obligee is protected against the failure of a bond principal to fulfill its contractual obligation.
What is Indemnity to Sheriff?
  • Indemnity to Sherriff is a bond intended to hold the sheriff harmless for his actions in executing a legal notice of process. It protects the official against suit from party against whom judgment is executed as long as his actions were within the scope of the execution.
What are Individual Bonds?
  • Individual Bonds is a term generally used with public official bonds, which refers to bonds written in the name of the specific public official.
What is an Injunction, Defendant (Stay of)?
  • In this instance of an injunction a defendant may furnish a bond to stay the injunction and proceed as intended prior to the injunction being granted. This bond indemnifies the plaintiff for loss or damage suffered if it is subsequently ruled that injunction should have been allowed.
What is an Injunction, Plaintiff?
  • An injunction is established by legal process to enforce a requirement that a defendant take specific action or refrain from specific action. Bond furnished to defendant to indemnify against loss or damage suffered if it is ruled that an injunction was improper.
What is an Internal Revenue Bond?
  • An Internal Revenue Bond is a federal bond requirement of manufacturers, wholesalers and retailers of products such as distilled spirits or tobacco products to guarantee compliance with applicable regulations and laws including taxes due.
What is an Intestate?
  • An Intestate is an individual who dies without a legal will. This will require a probate court to appoint a fiduciary to administer the estate since the deceased had not designated a party to act in the role of executor.
What is a Joint and Several Liability?
  • Sureties bind themselves jointly and individually to the obligee(s) so that the sureties may be sued either together or separately for enforcement of the bond.
What is Joint Control?
  • Joint Control is an arrangement by written agreement and acknowledgement of a financial institution holding estate funds whereby any access to said funds requires two signatures: the fiduciary's and that of a third party, i.e. attorney, surety, or agent.
What is Joint Venture?
  • Joint Venture is an association established to conduct a single transaction or series of related transactions, as contrasted to an ongoing business that involves many transactions. It is a special purpose partnership whose members can be sole proprietorships, partnerships or corporations.
What is Judgment?
  • Judgment is an obligation created by a court decree or decision.
What is a Judicial Bond?
  • Judicial Bonds are Bonds required by litigants who seek to avail themselves of privileges or remedies which are allowed by law, upon condition that a bond be furnished for the protection of the opposing litigant or other interested parties.
What are Large Deductible Plans?
  • Large Deductible Plans are a type of insurance program bond in which the insurer pays all losses, including those that fall within the deductible, and seeks reimbursement from the policyholder on a monthly or quarterly basis. The bond protects the insurer in the event the policyholder does not reimburse the insurer for losses within the deductible.
What are Lease Bonds?
  • Lease Bonds are guarantees that the party leasing property will make payments and fulfill other terms of the lease.
What is Legal Liability?
  • Legal Liability is an obligation imposed by law.
What is a Legatee?
  • A Legatee is an individual to whom property is given under the terms of a will.
What is a Lessee?
  • A Lessee is a tenant.
What is a Lessor?
  • A Lessor is an individual who grants a lease.
What is a Letter of Credit?
  • A Letter of Credit is an engagement by a bank made at the request of a customer that the issuer will honor drafts or other demands for payment upon compliance with the conditions specified in the credit. A credit may be either revocable or irrevocable.
What is a Liability?
  • A Liability is a broad term denoting any legally enforceable obligation.
What are License and Permit Bonds?
  • License and Permit Bonds are required to obtain a license or permit in many cities, counties, states or other political subdivisions. They may be required for a number of reasons, including the payment of certain taxes and fees or providing consumer protection as a condition to granting licenses related to selling things such as motor vehicles or contracting services.
What is a Lien?
  • A Lien is a charge upon real or personal property for the satisfaction of a debt.
What is the Limit of Liability?
  • The Limit of Liability is the maximum amount a surety is liable to pay in case of a loss as set forth in the contract.
What is a Limited Liability Company (LLC)?
  • A Limited Liability Company or LLC is a hybrid business entity created by statute. It is an unincorporated association of members which, if properly structured, receives pass-through federal tax treatment and limited liability for its members.
What is a Limited Partnership?
  • A Limited Partnership is a partnership formed under legal auspices having as members one or more general partners and one or more limited partners. The limited partners are not bound by the obligations of the partnership beyond their respective contributions.
What is to Liquidate?
  • To Liquidate is to pay a debt. To settle the accounts and distribute the assets of an estate.
What is a Liquor Bond?
  • A Liquor Bond is a general term describing a bond given in compliance with either Federal or State laws or regulations governing the sale, manufacture or warehousing of alcohol.
What is a Litigant?
  • A Litigant is a party to an action at law.
What is a Loss Ratio?
  • A Loss Ratio is the percentage which incurred losses bear to premiums.
What are Lost Securities Bonds?
  • Lost Security Bonds are bonds given by owners of valuable instruments (i.e. stocks, bond, promissory notes, certified checks, etc.) which are alleged to have been lost or destroyed, in order to protect the issuers against loss which may result from the issuance of duplicate instruments or in some instances, payment of cash value thereof.
What is Mandamus?
  • Mandamus is a common law writ issuing from a superior court to an inferior court, corporation or public officer, requiring the person so ordered to do some particular act therein specified, which pertains to his or her office. If the writ is issued before there has been a final decision on the merits, the person requesting the mandamus may be required to give bond to indemnify the person so ordered against loss or damage in case it is finally decided that the mandamus should not have been issued.
What are Maintenance Bonds?
  • The normal coverage provided by a Maintenance Bond is a guarantee against defective workmanship or materials for a specified period of time after a project is completed. Maintenance periods range from one to several years; however, the standard is one year.
What is a Mechanic's Lien?
  • A Mechanic’s Lien is the right to detain property exercised by one who has furnished labor or material.
What is Minimum Premium?
  • The Minimum Premium is the smallest amount of premium acceptable for a specific period.
What is a Minor?
  • A Minor is a person who is not of legal majority. Oftentimes, a guardian bond or conservator bond is needed when a minor receives money from a settlement, inheritance or lawsuit.
What are Miscellaneous Bonds?
  • Miscellaneous Bonds are bonds which cover performance of contracts and agreements with private parties and government agencies, for example, lost securities, utility deposit, wages, and welfare.
What are Miscellaneous Indemnity Bonds?
  • Miscellaneous Indemnity Bonds are bonds which do not fit any of the well-recognized divisions or subdivisions, and therefore, are thus categorized. The bond manual will supply further detail.
What is a Moral Hazard?
  • A Moral Hazard is the possibility of loss caused by, or accentuated, by the dishonesty or carelessness of the insured or others.
What are Name Schedule Bonds?
  • Name Schedule Bonds is a type of public official or fidelity bond that lists the specific names and amounts of each named individual bonded. Name schedule bonds use one bond, but attach a schedule of individual names of the bonded public officials. Each name will list a specific dollar amount for which that individual is being bonded. These may be used to bond a panel of city council members or similar body of officials.
What are Name Schedule Public Official Bonds?
  • Name Schedule Bonds use one bond, but attach a schedule of individual names of public officials being bonded. Each name will list a specific dollar amount for which that individual is being bonded. These may be used to bond a panel of city council members or similar body of officials.
What is a Negotiable Instrument?
  • A Negotiable Instrument is the commercial paper which may be circulated with or without endorsement.
What is a Notary Public?
  • A Notary Public is an official who attests signatures on documents.
What are Notary Public Bonds?
  • Notary Public Bonds include bonds that are required by statutes to protect against losses resulting from the improper actions of notaries.
What is a Note?
  • A Note is a written promise to pay a certain sum of money.
What is an Obligation?
  • An Obligation is an enforceable duty assumed by or imposed upon a person, firm or corporation.
What is an Obligee?
  • The Obligee is the person or entity for whom or which a surety provides protection due to the lack of performance of the principal's obligations.
What is an Obligor?
  • An Obligor is an entity for whose account the debt or default is made. Under a bond, strictly speaking, both the principal and the surety are the obligors since the surety company must answer if the principal defaults.
What is an Open Default Bond?
  • An Open Default Bond is an instance in which a judgment has been entered by default, the defendant may, under certain circumstances, have the case reopened and tried on its merits, upon giving a bond conditioned for the payment of any judgment that may be rendered in the action.
What is an Open Penalty?
  • An Open Penalty is a term used to refer to the unlimited liability of the surety on a particular bond.
What is an Ordinance?
  • An Ordinance is a municipal regulation.
What are Payment or Labor and Material Bonds?
  • The coverage provided by a Payment Bond or Labor and Material Bond is that the contractor will pay for certain labor and material used in the prosecution of the work which he is obliged to perform under the contract. Since liens may not be placed on public jobs, the payment bond may be the only protection for those supplying labor or materials to a public job.
What is a Parent Company?
  • A Parent Company is a corporation owing or controlling one or more other corporations.
What is a Partnership?
  • A Partnership is a legal relationship created by the voluntary association of two or more persons to carry on as co-owners of a business for profit.
What is a Penalty?
  • A Penalty is a term used to refer to the monetary size or limit of bond.
What is a Pension?
  • A Pension is a fixed sum of money regularly paid to a person.
What is a Per Occurrence Limit?
  • A Per Occurrence Limit is a bond limit that is applied to each loss/occurrence that is incurred during the term of the bond. For example, if a surety receives 10 claims of $5,000 each on a bond with a per occurrence limit of $10,000, the surety would pay out $50,000.
What are Performance Bonds?
  • The coverage provided by a Performance Bond is that the principal will faithfully perform the terms and conditions of a written contract. These bonds frequently incorporate payment bond (labor and materials) and maintenance bond liability. This protects the owner from financial loss should the contractor fail to perform the contract in accordance with its terms and conditions.
What is a Permit?
  • A Permit is the permission given by a governmental authority to engage in some activity.
What is a Personal Surety?
  • A personal Surety is an individual who acts as surety for another, who may or may not exact a price for his services, and usually is not regulated by any governmental agency, such as is the corporate surety.
What is a Petitioning Creditors' Bond?
  • When a petition is filed to have a person adjusted a bankrupt and application is made to have a receiver or a marshal take charge of the property of the alleged bankrupt prior to the adjudication, the petitioners are required to give bond to indemnify the alleged bankrupt for such costs as counsel fees, expenses and damages that may be occasioned by such seizure in case the petition is dismissed or withdrawn by the petitioners.
What is a Plaintiff?
  • The Plaintiff is the person or entity that brings an action in a court of law.
What are Plaintiff Bonds?
  • Plaintiff Bonds are bonds which are required of a plaintiff in an action of law. They generally protect against damages to the defendant caused by the plaintiff's legal action, should the court decide for the plaintiff.
What are Position Schedule Bonds?
  • Position Schedule Bonds are a type of fidelity or public official bond, which lists specific positions and their corresponding penalty amounts. Position schedule bonds use one bond, but attach a schedule of positions to be bonded. Each name will list a specific dollar amount for which that individual is being bonded. This type of bond may be used to bond certain positions that have a high amount of turnover. Using a position instead of a name will reduce the paperwork involved year-to-year.
What is Power of Attorney?
  • Power of attorney is the Authority given one person or corporation to act for and obligate another to the extent laid down in the instrument creating the power. In corporate suretyship, an instrument under seal which appoints an attorney-in-fact to act on behalf of a surety company in signing bonds.
What is a Premium?
  • A Premium is the sum of money paid as consideration for an insurance policy or bond.
What is the Principal?
  • The Principal refers to the individual required to be bonded by the obligee.
What is Pro Rata Cancellation?
  • Pro Rata Cancellation is the computation of the return premium resulting from cancellation on a proportionate basis.
What is a Probate?
  • A Probate is the legal process of administering estates of decedents, minors and incompetents.
What is a Probate Bond?
  • A Probate Bond is a bond that guarantees an honest accounting and faithful performance of duties by administrators, executors, trustees, guardians and other fiduciaries, so-called because such bonds are usually filed in a Probate Court.
What is a Prohibited Risk?
  • A Prohibited Risk is the risk of a class which the company will not entertain in any circumstances.
What is Proof of Loss?
  • Proof of loss is a sworn statement by claimant setting forth details of his claim.
What are Public Official Bonds?
  • Public Official Bonds are bonds which protect against dishonesty and lack of faithful performance by a public official. These bonds are required by statutes and ordinances.
What are Public Officials?
  • Public Officials are individuals who hold public office.
What is a Qualifying Limit?
  • A qualifying limit is the largest net amount that a surety company may retain. The Qualifying Limit for bonds filed with the Federal Government is established annually by the US Treasury Department. Several states also establish Qualifying Limits applicable to bonds filed in their particular jurisdictions.
What are Rates?
  • Rates are the amount of money per thousand dollars (or percentage) used to determine the bond premium.
What is a Rate Manual?
  • A Rate Manual is a compendium that lists, among other items, the rates established for individual risks, e.g. The Rate Manual of Fidelity, Forgery and Surety Bonds of the Surety Association of America.
What is a Rating Bureau?
  • A Rating Bureau is an organization which files rates with state supervisory authorities for those member companies authorizing it to do so.
What is a Receiver?
  • A receiver is an individual appointed by a court to take custody of property.
What are Reclamation Bonds?
  • Reclamation Bonds are a type of bond which provides protection in the event that a person or entity does not restore land, which has been mined or otherwise altered by the person or entity, to its original condition.
What is Recovery?
  • Recovery is the Reimbursement received by a surety from a reinsurer, by subrogation, or from salvage following a loss.
What is a Redelivery Bond?
  • A Redelivery Bond is substantially the same as a Forthcoming Bond.
What is Refunding Bond-Rate Litigation?
  • Refunding Bond-Rate Litigation a term that is applicable to any bond conditioned for future return, if ordered, or money which the principal was allowed to charge and retain pending the final determination or decision in a contested matter.
What is Reinsurance?
  • Reinsurance is a form of insurance that insurance/surety companies buy for their own protection - a sharing of insurance. An insurer/surety (the reinsured) reduces its possible maximum loss on either an individual risk (facultative) or on a large number of risks (treaty) by giving (ceding) a portion of its liability to another insurance/surety company (reinsurer).
What is Reinsured?
  • Reinsured is when an insurance/surety company which originates an insurance policy/surety bond and cedes a portion of the liability to another company (reinsurer).
What is a Reinsurer?
  • A Reinsurer is an insurance/surety company which assumes all or part of an insurance policy/surety bond written by a primary insurance/surety company (ceding company).
What is to Release?
  • To Release is to give up or abandon an enforceable right. The document evidencing such act.
What is a Removal Bond?
  • A Removal Bond occurs in an instance in which a case originally bought into a state court is removed to the federal court, and the defendant is required to give bond for the payment of costs in federal court if the case is found to have been improperly removed. A similar bond may be required on the removal of a case from one state court to another.
What is a Renewal?
  • A Renewal is a continuance of a bond or policy for a subsequent premium term.
What is a Replevin?
  • A Replevin is a legal proceeding used to recover specific personal property. A replevin bond may be required when a bank, individual, sheriff or company needs to repossess property or assets.
What is a Replevin-Defendant's Bond to Recover?
  • Where personal property has been replevied the defendant may, by the furnishing of a bond, regain possession of the property, pending final decision on the merits. The bond is conditioned for redelivery of property to the plaintiff, if ordered to do so, or otherwise to comply with a court order or judgment.
What is a Replevin-Plaintiff's Bond to Secure?
  • Replevin is an action to recover possession of specific articles or personal property. The replevin bond, which the plaintiff is required to furnish, is condition for the return of the property, return is ordered, and for the payment of all costs and damages adjudged to the defendant.
What is Retention?
  • Retention is the portion of a reinsured risk that the originating insurance/surety company does not cede to the reinsurer.
What are Retrospective Plan Bonds?
  • Retrospective Plan Bonds are a type of insurance program bond in which the final premium is a combination of incurred losses and an administrative charge. Retrospective plans are loss sensitive insurance plans. Since final loss costs may take years to develop, the bond covers payment of the final premium amount.
What is Retroactive Restoration?
  • Retroactive Restoration is a provision in a bond whereby, after payment of a loss, the original amount of coverage is automatically restored to take care of undiscovered losses as well as future losses.
What is a Rider?
  • A Rider is an attachment to a bond that modifies its conditions by expanding or restricting benefits or excluding certain conditions from coverage.
What is Risk?
  • Risk is any chance of loss. The insured or the property to which the bond relates.
What are the RMA Annual Statement Studies?
  • The RMA, an acronym for Robert Morris Associates, statement studies contain composite financial data on manufacturing, wholesaling, retailing, service and contracting lines of business. Financial statement on each industry are shown in common size form and are accompanied by widely used ratios.
What is a Salvage?
  • In suretyship, salvage is that which is recovered from the principal or indemnitor to offset the loss and expense paid by a surety in satisfying its obligations under a bond. The value of property after it has been partially damaged by fire, malicious mischief or other perils.
What is an SBA?
  • An SBA is an acronym for the Small Business Administration. The SBA has a program to help small and minority owned contracting businesses obtain surety bonds.
What is a Schedule Bond?
  • A Schedule Bond is a bond that covers loss resulting from dishonest or fraudulent acts of employees who are listed by name or by position in a schedule attached to the bond.
What are Securities?
  • Securities are certificates evidencing debts or shares of ownership.
What are Self-Insurers Retention Plan Bonds?
  • Self-Insurers Retention Plan Bonds are a type of insurance program bond that is commonly used with Workers' Compensation insurance, General Liability coverage or other liability coverage where limited coverage is available; or coverage, when available, may not be affordable.
What is a Sequestration Bond?
  • A Sequestration Bond is substantially the same as Attachment Bond-Plaintiff's.
What is the Sheshunoff Bank, and Sheshunoff SandL?
  • The Sheshunoff Bank, and Sheshunoff SandL reference guide provides summary financial statistics on Commercial Banks and Savings and Loans respectively. The guide is organized by state and city. A financial rating is made available based on an interpretation of the financial strengths of the bank or SandL.
What are Short-Term Bonds?
  • Short-Term Bonds are bonds covering fiduciaries whose duties are to collect the assets of the decedent, pay the debts and distribute the remainder according to law. The terms of these fiduciaries are usually brief.
What is a Sole Obligor Bond?
  • A Sole-Obligor Bond is a promise or engagement by one of the parties to a contract to the other, as distinguished from the mutual engagement of the parties to each other, not necessarily implying a consideration; a surety may undertake to perform some action or guarantee the performance of another as a sole-obligor - as such, there are only two parties to the bond, the surety and the obligee.
What is Stack/Cumulative Liability?
  • Stack or Cumulative Liability occurs when a bond has a definite expiration date and a new bond must be filed for each successive term. Each bond carries a new bond penalty, thus "stacking" the bond liability from year to year.
What is a Statute?
  • A Statute is a law enacted by a legislature.
What is a Statute of Limitations?
  • A Statute of Limitations is a law establishing limitations on the period within which action must be taken.
What is Statutory?
  • Statutory is required by, or having to do with, a law or statute.
What is a Statutory Bond?
  • A Statutory Bond is a term generally used describing a bond given in compliance with a statute. Such a bond must carry whatever liability the statute imposes on the principal and the surety.
What is a Statutory Warranty Deed?
  • A Statutory Warranty Deed form prescribed by some state statutes.
What is Stay of Execution?
  • A bond to stay or suspend execution on a judgment. It guarantees that payment of the judgment upon termination of the stay.
What is a Stop Order or a Stop Notice?
  • A Stop Order or a Stop Notice is a formal written notification from owner to contractor to cease work on a project.
What is a Subdivision Bond?
  • A Subdivision Bond is a Bond guaranteeing that a developer of a subdivision will, within a specified period, construct improvements on the property, such as streets, sidewalks, curbs, gutters, sewers, etc. at his own expense.
What is the Submission?
  • The Submission is the presentation of underwriting data to one with the necessary authority to act.
What is Subrogation?
  • Subrogation is the surrender of rights by an insured against a third party to an insurance company that has paid a claim.
What is to Supersede?
  • Supersede is to replace.
What is Supersedeas?
  • Supersedeas is a writ staying execution of a judgment pending appeal.
What is a Superseded Suretyship?
  • When a company writes a bond to take the place of another bond which is canceled on the effective date of the new bond, a rider is generally attached (unless the bond itself contains a superseded suretyship provision) agreeing to pay losses that would have been recoverable under the first bond except for the expiration of the discovery period.
What are Supply Bonds?
  • Supply Bonds are bonds which guarantee performance of a contract to furnish supplies or materials. In the event of a default by the supplier, the surety indemnifies the purchaser of the supplies against the resulting loss.
What is a Surety?
  • A Surety is a person or entity which covers the acts of another.
What is the Surety Association of America (SAA)?
  • The Surety Association of America (SAA) is an association composed of leading capital stock insurance companies which engage in Fidelity, Surety and Forgery Bond Underwriting. It establishes the classification of risks. It also creates standard forms, provisions, riders and miscellaneous other forms. It collects and analyses statistical data, makes filings with regulatory authorities on behalf of its members, and performs other functions for the benefits of its members and subscribers and for their insured.
What are Surety Bonds?
  • Surety Bonds are three-party agreements in which the issuer of the bond (the surety) joins with the second party (the principal) in providing protection to a third party (the obligee) regarding fulfillment of an obligation on the part of the principal. An obligee is the party (person, corporation or government agency) to whom a bond is given. The obligee is also the party protected by the bond against loss.
What is the Surety Industry?
  • The Surety Industry is composed of contract surety business and commercial surety business. The products comprising each are sold through the same type of distribution system - agents and brokers.
What is a Suretyship?
  • A Suretyship is a legal, contractual relationship in which one party, surety, agrees to be answerable to another party, obligee, for the debt, default or miscarriage of third party principal.
What is a Term?
  • A Term is the period of time for which a bond or policy is issued.
What is a Testator?
  • A Testator is an individual who dies leaving a valid will.
What is a Third Party Liability?
  • A Third Party Liability is a bond provision that provides third parties the right to make claim against the surety bond. This increases the surety's exposure and may result in small nuisance claims.
What is a Treasury Listing?
  • A Treasury Listing is a financial rating published by the federal government that lists the maximum size of federal bond a surety is allowed to write.
What is a Trustee?
  • A Trustee is a person or entity named to manage a business' assets and work with the business creditors.
What is Ultra Vires?
  • Ultra Vires is a promise or engagement by one of the parties to a contract to the other, as distinguished from the mutual engagement of the parties to each other, not necessarily implying a consideration; a surety may undertake to perform some action or guarantee the performance of another as a sole-obligor - as such, there are only two parties to the bond, the surety and the obligee.
What is an Undertaking?
  • An Undertaking is similar to a bond except it is a two party agreement between the surety and the obligee - The principal is not named on the form. Under such an agreement, the obligee can make demand on the surety without first looking to the principal for action.
What is an Underwriter?
  • An Underwriter is an individual or employee of an insurance company who determines which risks to accept and the amount of such risks.
What is an Unearned Premium?
  • An Unearned Premium is the part of a premium, which has not yet been earned by the surety for the unexpired portion of the term of the bond.
What is the Uniform Commercial Code?
  • The Uniform Commercial Code is a codification of the law merchant adopted by many states.
What is Unilateral?
  • Unilateral describes an instance which only one party is involved.
What is a Value Line Investment Survey?
  • Value Line is an independent company that maintains information on larger, publicly traded companies, primarily those traded on the New York and American Stock Exchanges. Reports are updated quarterly. The information provided includes a synopsis of the company's operations and financial trends and is geared toward investors. Home Office maintains a subscription to Value Line, and most libraries retain copies in their reference collections.
What is a Waiver?
  • A Waiver is the intentional or voluntary relinquishment of a known right.
What is a Ward?
  • A Ward is an individual under guardianship.
What is a Warrant of Seizure?
  • A Warrant of Seizure is similar to Attachment Bond - Plaintiff which is a plaintiff bond which court requires plaintiff to furnish, indemnifying the defendant against loss or damage if there is no judgment against defendant.
What is a Will?
  • A Will is a document disposing of property upon death.
What is Without Prejudice?
  • The Without Prejudice clause is often seen on court judgments, motions or orders of decree. It is meant as a declaration that no rights/privileges of the parties concerned are to be considered waived or lost. If a case is dismissed "without prejudice," a new suit can be brought on the same cause or action. A document with this phrase is not sufficient evidence to cancel a court bond.
What are Work-On-Hand Reports?
  • A Work-On-Hand Report is a type of financial statement or schedule which lists a contractor's jobs in progress.
What is a Workers' Compensation Self-Insurers Bond?
  • Workers' Compensation laws, at the state and federal level, require employers to compensate employees injured on the job. An employer may comply with these laws by purchasing insurance or self insuring by posting a workers' compensation bond to guarantee payment of benefits to employees. This is a hazardous class of commercial surety bond because of its "long-tail" exposure and potential cumulative liability. The "long-tail" exposure stems from the two statutory bond forms:
  • Traditional - bond form: The surety is liable for payment of the principal's workers' compensation obligations occurring during the time the bond is in force. When the bond is canceled, the surety continues to have liability for all workers' compensation claims incurred between the effective date of the bond and the cancellation date of the bond.

  • Last surety on - bond form: The surety assumes all past, present and future liability to pay the principal's self-insurers workers' compensation obligations. The surety is released from all accrued liability if the surety cancels the bond and the principal later posts an acceptable replacement security.
What is Writ?
  • Writ is an order issued in the name of a court.
What is Writ of Error?
  • Writ of Error is a writ issued by an appellate court to review a final judgment or decree of an inferior court, and on such review, to affirm or reverse the same. Bond required is, in effect, an appeal bond.

This glossary attempts to illustrate common usage of surety industry terms. These brief descriptions are not intended as legal interpretations. Consult an insurance dictionary or an industry professional for more complete information.

Parts of these definitions are provided as a courtesy by Western Surety Company, and The Main Street America Group.

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