Types of Bonds
Fidelity BondProvides coverage to an insured business or individual for money or other property lost because of dishonest acts of its bonded employees, either named or by positions. The dishonest acts include larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, or willful misapplication, whether employees act alone or as a team.
Surety BondGuarantees one party will make good the default or debt of another. There are three parties involved; the principal, who has primary responsibility to perform the obligation (after which the bond becomes void); the Surety, the individual with the secondary responsibility of performing the obligation if the Principal fails to perform. (Surety has recourse against the Principal for reimbursement of expenses incurred by the Surety in the performances of the Obligation); and the Obligee, to whom the right of performance (obligation) is owed. This is usually not a transfer of risk.
Administrative/Estate/Executor/Probate Court BondsGuarantees that the executor or administrator of an estate will conduct his or her duties according to the provisions of the will and the legal requirements of the jurisdiction. If dishonest acts by the executor or administrator result in financial loss to the estate, the bond will act as an indemnitor to the estate. This bond is posted by the executor or administrator of the estate.
Bid BondA bond required of a contractor submitting a bid on a project. If the contractor then refuses to undertake the project, the bid bond assures that the developer will be paid the difference between the lowest bid and next lowest bid subject to maximum penalty amount. The bid bond encourages contractors to make serious bids and live up to their obligations.
Completion BondProtection for a mortgagee guaranteeing that the mortgagor will complete construction. The mortgagee (such as a bank) lends money to the mortgagor (the owner of the project) in order to pay the contractor who is actually physically building the project. Upon completion, the project then serves to secure the loan. Should the project not be completed, the mortgagee is protected through the completion bond.
Employee Benefits (ERISA) BondThe Employee Retirement Income Security Act of 1974 requires employers that have a pension or profit sharing plan to maintain a bond equal to ten percent of the amount of the plan's asset subject to maximum of $500,000 per plan. The bond insures that the trustees of the plan will not remove funds inappropriately.
Financial Guarantee BondProvides protection to the beneficiary against breach of contract by the surety or by the principal by obligating the surety to pay a certain amount of money if the principal fails to perform its obligation. The surety will retain the right to diminish the loss or, arrange for completion of the contract.
Guardian BondGuarantees that the guardian appointed by the court is authorized to pay expenses of the minor(s) or of another individual(s) who is deemed to be incapable of managing his/her own affairs will fulfill their duties.
License BondGuarantees compliance with various city, county, and state laws that govern the issuance of a particular license to conduct business.
Maintenance BondGuaranteeing against defects for a specified time period following the completion of a contract.
Notary BondDesigned to protect the state from errors or misrepresentations made while a notary is performing his duties. Ensures that the state can be reimbursed for any loss that it incurs in the event that a notary betrays the public trust. This is essentially the state's insurance policy.
Payment BondGuarantees a contractor will pay fees owed for labor and materials necessary for construction of a project. If these fees are not paid, an owner who has paid the contractor might be confronted with liens from subcontractors, suppliers, or workers filed against the completed project. In turn, the owner may be responsible for payment that exceeds the value of the work done.
Performance BondGuarantees a contractor will perform under the contract in accordance with all specifications for the project.
Permit BondContract guaranteeing that a person licensed by a city, county, or state agency will perform activities for which the bond was granted, according to the regulations governing the license.
Position Schedule BondGuarantees the honesty of those holding named positions in a firm, as opposed to a bond that refers to named individuals or is blanketed for all positions.
Public Official BondA type of surety bond that guarantees the performance of public officials. Public officials are responsible for a broad range of property including fees they collect, money they handle, and bank accounts they oversee. They may also be responsible for misdeeds that result in a loss of public funds by those they supervise. In some cases coverage is available for an entire group of employees under a Public Employees Blanket Bond.
Seizure BondA drastic but legal preliminary remedy for certain kinds of infringement. A Federal court may order the United States Marshal to confiscate and impound allegedly infringing articles pending trial. If the allegation was incorrect, the party seeking seizure must post a bond to protect the party whose items were seized. The remedy may even be granted ex parte in certain circumstances (meaning that the defendant has no chance to oppose the seizure in advance).
Call a First Citizens Insurance Advisor at
1.888.FCB INSURE (1.888.322.4678) between 8:00 a.m. and
5:00 p.m. Eastern time weekdays
Insurance products are not insured by the FDIC or any federal government agency and are not a deposit or other obligation of, or guaranteed by, any bank or bank affiliate.