Surety Bonds Glossary Terms:

Bid Bonds
Bid Bonds are often required when submitting bids. These bonds guarantee that the bidder will enter into a contract for a project at the price they bid, and often guarantee that the Surety will issue a performance and payment bond if the Contractor is awarded the contract.

Contractor’s License Bonds
Contractor’s License Bonds are required by the State or local government. These ensure that contractors comply with all ordinances and regulations governing their profession.

Maintenance Bonds
Once a project has been completed often the owner will request a maintenance bond for one or more years guaranteeing their work from any defects.

Payment Bonds
Payment bonds are included with the price of the Performance Bond. The payment bond guarantees that the subcontractors, vendors and suppliers will get paid. This is to prevent any one of these entities from placing a lien on the property.

Performance Bonds
Contractors are required to post bonds whenever taxpayer money is being utilized to complete projects for the city, town or municipality. In the event that a contractor does not complete a project, the bonds provide money to hire a new contractor and completed the project. 

Site Improvement, Subdivision or Completion Bonds
These bonds are often required by city, town, townships boroughs, etc. when a developer or a property owner will be making improvements to the property.  Required improvements would be sidewalks, curbs, erosion control, storm drainage.  The bond guarantees that the contractor or property owner will complete these required improvements.

Supply or Supply & Install Bonds
These bonds are similar to performance bonds, they guarantee that the contractor will supply goods or products as requested by purchase orders,  some purchase orders include installation of the product.

Surety Bonding
Surety Bonding is the glue that binds construction projects. It allows construction companies to agree to build, developers to agree to pay construction companies, construction companies to agree to pay contractors, and developers to agree to maintain their properties in accordance with community and governmental standards.

Surety Bonds
Surety Bonds are a three party obligation.  The three parties are the Insurance Company, the Principal (contractor) and the Owner. The Insurance Company stands behind the principal and guarantees that they will perform and complete the job under the terms and conditions specified in the contract Bond Insurance Company.
 

Other Bonds:

Employee Dishonesty Bonds/Fidelity Bonds
Employee Dishonesty Bonds or Fidelity Insurance protects the business owner from employee theft or embezzling money from the company. The type of dishonesty covered in bonds deals with the effects of employee theft and

Fidelity Bonds
Fidelity Bonds can include Third Party Coverage, which protects the business owner from theft by an employee when the employee is offsite.  These are often requested by Home Healthcare agencies, Security Guards, etc.

Fiduciary Bonds
A Fiduciary is a person appointed to handle the financial affairs of another who is incapable of handling his/her own affairs for one reason or another. Fiduciary Bonds are issued to guarantee the faithful performance of Fiduciaries.

Janitorial Bonds
Janitorial Bonds are a de facto prerequisite for doing business in the cleaning industry. These bonds cover the dishonest acts of employees off premises doing work for a third party. Often janitorial companies are asked “Is your company ‘bonded?’”

License & Permit Bonds
License and Permit bonds are usually small in amount and premium. There can be a bond required for just about any type of license you must obtain.

Lost Instrument Bonds
Most states require a claimant to obtain a Lost Instrument Bond to have funds released from the State in the event of a dormant account being turned over to the State.  These bonds are required by Banks for property that is lost, certified checks, cashier’s checks or money orders.

Mortgage Bonds
Mortgage Bonds provide protection for the consumer for any fraudulent or misappropriation of funds paid to secure a mortgage.  They are required by the State in which the Mortgage Broker maintains a license.

Motor Vehicle Dealer Bonds
Motor Vehicle Dealer Bonds can serve many purposes depending on the state, but usually the bond serves to protect the consumer from fraud misrepresentation or to protect the State from failure to pay taxes or file the proper licensing information for a vehicle.

Notary Bond E & O Insurance
Notary Bond E & O Insurance is a policy, which protects the notary from any errors or omissions made that could harm the customer.

Notary Bonds
Notary Bonds protects the customer from any harm that could occur from acts or services provided by a notary.

Probate Bonds
Probate Bonds are required by the Surrogates Court when a individual has been appointed as Guardian, Administrator or Executor of a deceased or incompetent persons estate.  The bond protects the heirs of the estate or any debtors of the estate from misappropriation of the funds.