A
A-Rated Carrier
A surety company with an 'A' or better financial-strength rating from AM Best. Most obligees require A-rated carriers.
Appeal Bond (Supersedeas Bond)
Posted to delay enforcement of a court judgment while you appeal. Typically 1.25× to 1.5× the judgment amount.
Auto Dealer Bond (MVD Bond)
Required by the state DMV/MVD before licensing an auto dealer. Protects buyers from title fraud, odometer rollback, and lemon-law violations.
B
Bid Bond
Guarantees that if you win a construction project bid, you'll actually sign the contract and provide the required performance and payment bonds. Typically 5–10% of the bid amount.
Bond Amount (Penal Sum)
The maximum dollar amount the surety will pay on a valid claim. Set by the obligee, not by you. A $50,000 bond pays up to $50,000 in claims.
Bonded vs. Insured
'Bonded' means a surety guarantees your work or conduct (you reimburse claims). 'Insured' means an insurance company pays claims (you don't reimburse). Many businesses are both.
Business Service Bond
A type of fidelity bond protecting clients from theft by a service business's employees who work in client homes (cleaning services, janitorial, pet sitters, etc.).
C
Cancellation
A surety can cancel a bond with notice (typically 30 days). The obligee is notified and your license/contract may be at risk.
Claim
A demand for payment under the bond by an aggrieved obligee or third party. The surety investigates, pays valid claims, then collects from the principal.
Collateral
Cash or assets a surety may require if your credit or financials don't fully support the bond. Common for very large bonds or applicants with poor credit.
Continuous Bond
A bond that automatically renews each year until canceled by the surety or principal. Common for license/permit bonds.
Contract Surety Bond
Umbrella term for bid, performance, and payment bonds used on construction projects.
Contractor License Bond
Required by state or local agencies before they'll license a contractor. Bond amount varies — often $5,000 to $25,000 — and protects clients from contractor fraud or non-compliance.
Court Bond
A bond required by a court before letting you take a particular action — appealing a judgment, serving as executor, posting an injunction, etc.
Customs Bond
Required by U.S. Customs (CBP) for importers, ensuring duties and taxes get paid. Either single-entry or continuous (annual).
E
Employee Dishonesty Bond
A fidelity bond protecting against employee theft. Common for businesses handling cash or client funds.
ERISA Bond
A federally required fidelity bond covering anyone who handles 401(k) or pension plan assets. Minimum coverage is 10% of plan assets, capped at $500,000 (or $1M for plans holding employer securities).
Executor Bond
A specific type of probate bond required when someone is appointed to administer a deceased person's estate. Some wills explicitly waive the bond requirement.
F
Fidelity Bond
Protects a business from financial loss caused by employee dishonesty — theft, fraud, embezzlement. Often required by clients or regulators.
FMCSA
Federal Motor Carrier Safety Administration — the federal agency that requires the BMC-84 freight broker bond.
Freight Broker Bond (BMC-84)
A federally required $75,000 surety bond for property freight brokers, mandated by the FMCSA. Protects motor carriers and shippers against unpaid invoices.
G
Guardianship Bond
A court-required bond protecting the assets of a minor or incapacitated adult under a court-appointed guardian's control.
I
Indemnity Agreement
The contract you sign with the surety promising to reimburse them for any valid claim they pay on your behalf. The bond is not insurance — it's a credit instrument backed by your indemnity.
L
License & Permit Bond
A bond required by a state, county, or municipality before they'll issue or renew a business license. Common for contractors, auto dealers, freight brokers, mortgage brokers, and many trades.
M
Miller Act
Federal law requiring performance and payment bonds on most federal construction projects over $150,000. State 'Little Miller Acts' do the same for state-funded projects.
Mortgage Broker Bond
A state-required bond for mortgage brokers and originators, set by each state's NMLS regulations. Bond amount typically scales with loan volume ($25,000 to $150,000).
N
NMLS
Nationwide Mortgage Licensing System — the regulatory body that requires mortgage broker bonds. Each state sets its own bond amount.
Notary Bond
A surety bond required by most states before commissioning a notary public. Protects the public from notary errors. Bond amounts vary by state ($500 in some states, up to $25,000 in others).
Notary E&O Insurance
Errors-and-omissions insurance protecting the notary personally (the bond protects the public). Most notaries buy both.
O
Obligee
The party requiring the bond, who is protected by it. Examples: a state licensing board, a court, a project owner, the federal government.
P
Payment Bond
Guarantees you'll pay your subcontractors, laborers, and material suppliers. Required on most public works projects under the Miller Act (federal) and Little Miller Acts (state).
Performance Bond
Guarantees you'll complete the construction project per contract specifications. Usually 100% of the contract value. The owner can claim against it if you walk off the job.
Principal
The party that purchases the bond — typically a contractor, business owner, executor, or notary. You're the principal.
Probate Bond
A court-required bond that protects estate beneficiaries from misconduct by an executor, administrator, or guardian. Set by the probate court.
Public Official Bond
Required of certain public officials (treasurers, tax collectors, sheriffs) to protect the public from official misconduct.
R
Renewal
Most bonds run 1 year and require annual renewal. Some (like 4-year notary bonds) run multiple years. Lapsed bonds can interrupt your license — set renewal reminders.
S
Subdivision Bond
A construction bond required by a municipality before approving a residential subdivision plat. Guarantees the developer completes streets, sidewalks, sewers, and other public improvements.
Supply Bond
Guarantees a materials supplier will deliver the contracted materials at the agreed price and schedule. Used on larger construction projects.
Surety
The insurance company that issues the bond and guarantees performance. The surety pays valid claims first and then collects from the principal.
Surety Bond
A three-party contract among the principal (you), the obligee (the entity requiring the bond), and the surety (the carrier guaranteeing the bond). The surety guarantees you'll meet your obligations and pays valid claims if you don't — you then reimburse the surety.
T
Term Bond
A bond issued for a fixed period (e.g., 4 years) without renewal during the term. Common for notary bonds.
Three-Party Contract
Defining feature of surety: the principal, obligee, and surety are all parties to the bond — unlike insurance, which is two-party.
Title Bond (Lost Title / Bonded Title)
Allows you to obtain a vehicle title when the original is lost or you don't have a clear chain of ownership. Bond amount is typically 1.5× the vehicle's value.
U
Underwriting
The surety's process of evaluating your bond application — credit, financials, business experience, the bond type — to decide whether to issue the bond and at what rate.
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