Glossary

ADMINISTRATOR: A person appointed by the probate court to act as fiduciary to manage the assets and liabilities of a person who has died without leaving a will.

ADMINISTRATOR c.t.a.: This is the same as an Administrator, except the deceased has a Last Will and Testament.

ADMINISTRATOR d.b.n: The same as the Administrator, except the estate had been handled by another fiduciary. The new person appointed is a Successor to the former.

ADMIRALTY: Court bond filed in connection with litigation under maritime law.

AGGREGATE LIABILITY CLAUSE: This is a clause on a bond which will limit the surety’s liability to the penalty amount stated in the bond form, regardless of the number of claims filed against the bond.

AIRLINE REPORTING CORPORATION BOND (ARC): This bond guarantees the payment of airline tickets

ALCOHOL BONDS: This bond is provided in compliance with Federal or State laws or regulations governing the sale, manufacture or warehousing of alcohol for beverage or non-beverage uses. If the bond is given for beverages, often called a Liquor Bond.

ANCILLARY ADMINISTRATION: Administration bonds where the proceeding is auxiliary or ancillary to a principal administration in another state.

APPEAL BOND: This bond is filed with the court by a party against who a judgment has been rendered, in order to stay the execution of the judgment pending appeal to a higher court with the purpose of overturning the original judgment. The bond guarantees that the judgment will be paid if the appeal fails

APPLICATION: A questionnaire which must be completed providing required information concerning the one requesting the bond, describing the bond which is being requested. The application also contains the agreement to indemnify the surety in the event of a loss and the promise to pay the premium.

ATHLETIC EXHIBITION LICENSE BOND: Used generally in connection with boxing, wrestling and other athletic contests to assure the participants of the payment of the purse and the payment of expenses incident to the sporting event.

ATTACHMENT – DEFENDANT’S BOND TO DISCHARGE OR RELEASE: When an attachment has been filed, a defendant may discharge the attachment by providing the bond to the court conditioned for the payment of any judgment that may be rendered against the defendant in the action.

ATTACHMENT BOND (PLAINTIFF): Seizing the property of the defendant by a summary process from the court in advance of the trial on the merits of the case. The bond is taken and security for the payment of the judgment that may be recovered by the plaintiff in the action. The bond the plaintiff is required to post, provides for the indemnity to the defendant against the loss or damage in case it is finally determined that the statutory ground for seizing the property did not exist or the plaintiff fails to recover a judgment against the defendant.

ATTORNEY IN FACT: Person authorized, by written instrument, power of attorney, to act on behalf of another party; e.g. agent to whom the surety company gives power of attorney to execute bonds.

AUCTIONEER BOND: This bond permits and individual or business to act as a public auctioneer.

BENEFICIARY: A person who is entitled, by law or bond language, to claim against a bond even though not specifically named as an Obligee.

BID BOND: Guarantees a contractor will enter into a final contract for the amount bid and provide the appropriate performance and payment bonds.

BLUE SKY BOND: Bond is required by many states in connection with the regulation of the sale of securities. The laws are prohibiting the sale of worthless securities. The bond is required by security dealers and indemnifies the purchasers against loss due to false representation. The term "Blue Sky" originated when a court complained that certain stock was backed only by the blue sky.

BOND (SURETY): Agreement in which one party, called the surety, obligates itself to a second party, called the obligee, in answer for the default of a third party, called the principal.

BONDED WAREHOUSE (FEDERAL): When furnished as a result of Internal Revenue regulations -guarantees the product will not be released until the tax has been paid. If in favor of the Customs Department – guarantees the product will not be released until all duties have been paid. When furnished under any provision of the Federal Warehouse Act, guarantees faithful accounting for the products sold.

BONDED WAREHOUSE (TO STATE): This bond would cover all types of products (grain, commodities, etc) stored in a warehouse. Any fraud or dishonesty on the part of the warehouse personnel with the issuance of a warehouse receipt or the handling of the stored property will create liability under the bond. The bond indemnifies the state for the benefit of its residents against loss of stored products (grain, commodities, etc.) stored in accordance with the warehouse law.

CANCELLATION CLAUSE: A clause in the Bond form permitting the Surety to terminate future liability by serving written notification to the Obligee.

CIGAR/CIGARETTE TAX BOND: Covers the compliance in the laws and regulations in the sale and the payment of taxes of cigars and cigarettes.

COAL, GAS & OIL LEASES BOND: This type of bond may be in favor of the federal government or state government. It guarantees the payment of rent or royalties and the restoration of the property at the end of the lease term.

CO-FIDUCIARY: Where two or more fiduciaries are appointed to administer an estate. This bond is also referred to as Co-Administrators.

COLLATERAL: Anything of value pledged to the surety to protect the surety against loss by reason of default of the Principal.

COLLECTION AGENCY BOND: This bond guarantees the accounting of funds received by the collection agency.

COMMERCIAL BONDS: All bonds, except those classified as contract or performance, are commercial. This type of bond is usually unique for each case and may be required by law.

COMMISSION: Money paid to an agent or broker for directing business to a surety or insurance company.

COMMITTEE: A person appointed by the court to manage the estate of a person who has been declared incompetent. Also knows an a Conservator, Curator or Guardian of Incompetent

CONCESSIONAIRE BOND: This bond guarantees the operation of a concession and the payment of rent or percentage of the profits.

CONTRACT/PERFORMANCE & PAYMENT BOND: Guarantees the performance of a person or organization in fulfilling the terms of a contract. Most of the contracts are for construction, and the contractor must meet pre-qualifications standards before being approved for the bond. These generally involve a payment bond for materials, labor and maintenance.

COST BOND: Required of a litigant for the payment of costs incurred during litigation.

CO-SURETY: One or two more surety companies directly participating in a bond. Their obligation to the owner is joint and several, but often a limit of liability for each surety is stated between themselves.

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

COURT BONDS: A general term encompassing all obligations required of litigants to enable them to pursue remedies in the courts.

CRIME/FIDELITY BOND: Crime insurance protects the insured’s property against burglary, robbery, or theft. The Fidelity insurance covers loss due to employee dishonesty against the employer.

CUMULATIVE LIABILITY: When a bond is cancelled or expired, and a new bond is issued to take the place and the first bond has a tail provision/discovery period the Surety is exposed to the possibility of a loss equal to the aggregate sum of the two bonds. In some situations, a renewal premium can make continuing bonds cumulative.

CUSTOM BONDS: This bond guarantees the payment of taxes, duties and compliance with regulations governing the entry of merchandise from foreign countries into the United States.

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

DEFENDANT BOND: Bond given by the defendant in litigation enabling them to regain possession of property pending the outcome of the court action, or to suspend the execution of a judgment, order of a court while the defendant seeks reversal of an unfavorable judgment in a higher court.

DETECTIVE AGENCY LICENSE BOND: Covers the compliance with laws governing the licensing of private detective agencies.

EMPLOYMENT AGENCY LICENSE BOND: Covers the compliance with the law governing the operation of an employment agency and indemnity against misrepresentation.

ERISA BOND: The Employee Retirement Income Security Act of 1974, requires among other things, that the trustees of an employee benefit plan have fidelity coverage equal, at a minimum, to 10% of the total plan’s assets. This bond is federally mandated.

ERISA BOND: The Employee Retirement Income Security Act of 1974, requires among other things, that the trustees of an employee benefit plan have fidelity coverage equal, at a minimum, to 10% of the total plan’s assets. This bond is federally mandated.

EXCESS WEIGHT AND LENGTH BOND: This bond indemnifies the Highway Department of a State against liability or damage to property due to the hauling of excess loads or the operations of excess length trucks and trailers.

EXECUTOR: A person who is named in the will to distribute and settle the estate of an estate.

FIDUCIARY: Person occupying a position of trust, one handling the affairs of another.

FIDUCIARY BOND: Required of administrators, executors, guardians, trustees and committees, which guarantee the faithful and legal performance of duties, such as managing the affairs of others or distributing a deceased assets

FINANCIAL GUARANTEE BOND: A bond which guarantees the payment of a sum of money whether or not the exact amount is known or stated. Common types are: court bonds (appeal), lease bonds and utility deposit bonds.

FIXED PENALTY BOND: A bond for which the amount is expressed in terms of a stated or definite sum of money.

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

FRANCHISE AND ORDINANCE BOND: Covers the compliance with ordinances in connection with the granting of a privilege on public property. This bond is usually written on behalf of a public utility or the owner of business property.

GARNISHMENT – BOND TO DISCHARGE OR RELEASE: When money or property belonging to a defendant has been attached while in the hands of a third party, the proceeding is called a garnishment and the third party is called the garnishee. The bond is similar to a Release of Attachment Bond.

GAS LEASES BOND: This bond covers the payment of royalty or rent in connection with the drilling and operation of gas wells.

GUARDIAN AD LITEM: One appointed to preserve the assets of the estate of a minor during a litigation which delays the appointment of a general guardian.

GUARDIAN OR GENERAL GUARDIAN: A fiduciary appointed by the court to administer the estate of a minor or incompetent.

HOLD OVER PUBLIC OFFICIALS: Those who are elected or appointed by succeed themselves in office or who continue beyond the limits of their terms until their successors are appointed or elected.

HUNTING, FISHING AND TRAPPING LICENSE BONDS: This bond is required for the sale of hunting, fishing and trapping licenses. The bond guarantees the faithful accounting of funds received to the proper governing authorities.

INDEMNIFICATION: Guarantees a second party repayment in the event of a loss or judgment against the first party.

INDEMNIFY: To compensate for actual direct loss sustained under a bond. There can be no recovery on a bond until the obligee has actually suffered a loss.

INDEMNITOR: One who enters into an agreement with a surety company to hold the surety harmless from any loss or expense it may sustain or incur on a bond issued on behalf of another.

INDEMNITY AGREEMENT: Contract entered into between the indemnitor and surety in which indemnitor secures surety against loss surety may sustain on bond on behalf of itself or another.

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.

INDEMNITY TO SHERIFF OR MARSHAL: A sheriff or marshal, in the execution of the process of the courts may incur liability or damage to a third party through an act or acts which turn out to be wrongful. Either official when requested to take a small particular action, may require a bond of a party making the request. The bond covers the liability of the sheriff or marshal in that connection.

INJUCTION – PLAINTIFF BOND TO SECURE: An injunction is a judicial process whereby the defendant is required to do or refrain from performing a particular act. An order granting an injunction may be on the condition that the plaintiff furnishes a bond to indemnify the defendant against loss in case it is decided that the injunction should not have been granted.

INJUNCTION – DEFENDANT’S BOND TO DISSOLVE: When an injunction has been issued, the court may order the injunction dissolved upon the giving of a bond. The bond guarantees payment the plaintiff may sustain as a result of the performance of the act or acts originally enjoyed. It is then the privilege of the defendant to proceed as if the injunction had never been issued.

INTESTATE: One who dies without a Will.

JANITORAIL BOND: Business service dishonesty bond that protects the business owner from theft of customer’s property by employees.

JOINT CONTROL: An arrangement by written agreement between a fiduciary and a surety, acknowledge by the bank in which funds are deposited or securities lodged so that the funds or securities are controlled by both parties; usually all checks are required to be signed by fiduciary and countersigned by an authorized representative (attorney is usually the joint custodian) to access to the securities can be had only in the presence of an authorized representative.

JUDICIAL BOND: A general term applied to all bonds filed with the court.

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

LETTER OF CREDIT: 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.

LIABILITY: This is a broad term denoting any legally enforceable obligations.

LIBEL – BOND TO DISCHARGE OR RELEASE: When a warrant for the seizure of a ship has been issued, the marshal is required to stay execution of the process, or discharge the ship if process has been levied, on receiving from the owner of the ship a bond or stipulation conditioned to comply with the decree of court in the action.

LICENSE BOND: Used interchangeably with the term "permit bond" to describe bond required by state law, municipal ordinance or regulation, to be filed prior to the granting of a license to engage in a particular business or a permit to exercise a particular privilege. Such bonds provide payment to the obligee for loss or damage resulting from violations by the licensee of the duties and obligation imposed upon him/her.

LIEN: A charge upon real or personal property for the satisfaction of a debt.

LITIGATE: The act of carrying on a suit, to settle a dispute in a court of law.

LIVESTOCK BUYERS BOND: This Bond guarantees the payment of livestock purchased and/or the accounting of funds received for the sale of the livestock.

LOST INSTRUMENT BOND: A bond given by the owner of a valuable security (stock, bond, promissory note, cashier check, etc.) which is alleged to have been lost or destroyed. It protects the issuer of the security against loss which may result from the re-issuance of a duplicate or, in some instances, payment of cash value thereof.

MAINTENANCE BONDS: Guarantees that a completed project will meet the requirements for workmanship or materials for a specific period of time.

MECHANICS LIEN BOND TO DISCHARGE: A lien against real estate may be filed for an amount claimed to be due for labor and 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 owner’s liability the owner may discharge the lien by giving a bond conditioned for the payment of any amount that may be found due to claimant with interest and costs.

MINIMUM PREMIUM: The least amount the surety company may charge for a particular bond for a designated period of time.

MISCELLANEOUS INDEMNITY BONDS: Bonds which do not fit any of the well recognized categories.

MOTOR VEHICLE DEALER BOND: This bond guarantees compliance with the law, payment of taxes, and in some cases payment of judgments

NOTARY PUBLIC BOND: Required by states to cover losses in the event of notary mistakes.

OBLIGEE: The party in whose favor a bond runs; the party protected by the bond against a loss. An Obligee may be a person, business or governmental agency.

OBLIGOR: The person who has engaged to perform some obligation; party liable under contract of Suretyship.

OPEN DEFAULT BOND: Where 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.

OPEN PENALTY BOND: A surety bond written without a limit on the liability of the principal or surety. Under the regulations of the federal government and the laws of many of the states, surety companies are not permitted to obligate themselves on anyone bond for an amount greater than a specified percentage of their capital and surplus.

ORDINANCE: Regulation that a governmental bond establishes.

PACKERS AND STOCKYARDS ACT BOND: The bond covers the compliance with the law and accounting for proceeds for the sale of livestock.

PAYMENT BOND: Guarantees payment by the contractor or subcontractor, laborers and suppliers involved in a project.

PENAL SUM: Amount of money for which surety is held liable under the bond

PERMIT BOND: This bond covers the compliance with ordinances governing the issuance of a license or the granting of a permit.

PETITIONING CREDITOR’S BOND: When a petition is filed to have a person adjudged of a bankrupt, an 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, counsel fees, expenses, and damages as may be occasioned by such seizure, in case the petition is dismissed or withdrawn by the petitioners.

PLAINTIFF: The party who complains or sues to seek remedial relief for an injury to its rights.

POWER OF ATTORNEY: The authority given one person or corporation to act for and obligate another, to the extend set forth in the instrument creating the power.

PREMIUM: The fee to be paid for bond.

PRINCIPAL: The one who is primarily bound on a bond furnished by a surety company.

PROBATE BOND: One that guarantees an honest accounting and faithful performance of duties by administrators, trustees, guardians, executors, and other fiduciaries. These bonds are customarily filed in a probate court.

PRODUCE DEALER BOND: This bond guarantees the accounting for produce shipped by farmers and others.

PUBLIC ADMINISTRATION BOND: This bond covers the faithful performance of duty by a person appointed or elected to administer estates where other interested parties do not apply for letters of administration. The Public Administrator takes over the estates where there is no next of kin.

PUBLIC OFFICIAL BOND: A bond that guarantees faithful performance of duty of a public official in a position of trust; also provides for an honest accounting of all public funds handled by him. Such bond is given to comply with a statute and, therefore, carries whatever liability the statute imposes.

RATE: The cost per unit of bond coverage. Such unit is in denominations of $1 ,000.

RECEIVER: Person appointed to represent the court in holding in trust and in administering the property under litigation.

RECLAMATION/RESTORATION BOND: This bond guarantees the restoration of the land to its original condition after the land has been mined.

RECOVERY: Reimbursement received by a Surety from a reinsurer, or by subrogation, or from salvage following a loss.

REMOVAL BOND: Where a case originally brought in a state court is removed to the federal court, 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. Similar bonds may be required on removal of a case from one state court to another.

REPLEVIN – DEFENDANT’S BOND TO RECOVER PROPERTY REPLEVIED: Where 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.

REPLEVIN – PLAINTIFF’S BOND TO SECURE: Replevin is an action to recover possession of specified articles of property. The Replevin bond, which the plaintiff is required to furnish, is conditioned for the return of the property, if return is ordered, and for the payment of all costs and damages adjudged to the defendant.

SEQUESTRATION BOND: Substantially the same as an attachment bond – plaintiff.

STATUTORY BOND: 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.

STAY OF EXECUTION: A bond to stay or suspend execution on a judgment. It guarantees the payment of the judgment upon termination of the stay.

STOCKYARDS AND LIVESTOCK DEALER BOND: The bond guarantees the payment for livestock shipped to the principal, and where an organization is involved, accounting the proceeds for the organization.

SUBDIVISION BOND: Guarantees that a developer will make certain off site or public land improvements. The key difference between subdivision bonds from regular contract performance bonds is that the owner/developer (the principal) has to pay the cost of building the bonded improvements rather than the public agency (the obligee).

SUPERSEDEAS BOND: This is a bond to supersede or take the place of a judgment, and coverage is substantially the same as under a defendant’s appeal bond.

SUPPLY BOND: Guarantees that the supplies or materials will be bought and delivered as specified in the contract. If the supplier defaults, the surety will indemnify the purchaser of the supplies against any loss sustained as a result

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

SURETYSHIP: Stated in simplest terms, suretyship embraces all forms of obligation to pay debts or answer for the default of another.

TAX BONDS: These bonds guarantee to the governing authority the payment of sales tax or use tax in different jurisdictions.

TERM: A period of time for which a bond is issued.

TESTATOR: One who makes a Will.

THIRD PARTY BOND: A license bond which gives parties other than the named obligee a right of action in their own name to recover loss or damage resulting from a breach by the licensee of his obligations under the law, ordinance or regulations under which the bond is required.

TREASURER BOND: This bond covers the faithful performance of duty as the Treasurer of a Town, City, Municipality, or other public entity.

TREASURY LIMITS: These are qualifying limits imposed upon surety companies by the US Treasury Department.

TRUSTEE: One named in a Will or Deed of Trust to manage the property for the benefit of another.

TRUSTEE IN BANKRUPTCY BOND: The bond covers the faithful performance of duty by a person appointed trustee by the court in the bankruptcy proceeding.

WAGE AND WELFARE BOND: This bond guarantees the employer contribution to wage and welfare funds.

WORKERS COMPENSATION BOND (SELF INSURER BOND): The bond guarantees payment by the employers of compensation benefits on their employees.

WRIT: Written document a court issues requiring the performance of a specified act, or giving authority to have it done.