Judicial Court Bonds
Bonds filed in court litigation, permitting a party to a court action to pursue his remedy at law. They are typically prepared by the attorney for the applicant.

Most bonds filed in litigation proceedings are financial guarantees and call for very careful underwriting.

Bonds given by Plaintiffs, such as Attachment, Replevin, Garnishment, Indemnity to Sheriff or Marshal, are less hazardous than those given by defendants; and where the applicant for the bond (the plaintiff in the litigation) is financially responsible and where the litigation grows out of a transaction connected with his or her normal business, such as the repossessing of property sold on the installment plan, bonds may usually be written in reasonable amounts without collateral. Bonds required in cases involving marital difficulties or purely personal differences not connected with the business of applicant should be avoided.

Bonds given by defendants, such as Supersedeas, Counter-replevin, Release of Attachment, Stay of Execution, Release of Garnishment, Release of Mechanic's Lien, etc., are extremely hazardous and are rarely written without collateral. Exception is made only where the applicant is an old established concern in unquestionable strong financial condition, and where the amount of the bond in relation to the applicant's net worth is comparatively small.

Cost bonds, filed by plaintiffs to guarantee payment of the court costs, are usually required in modest amounts and may be written for financially responsible applicants. Care should be taken to make sure the bond obligates the Company for costs only.

Removal Bonds, supporting the petition of a defendant to remove the case to a different court, usually carry the same liability as a cost bond and may be underwritten in the same manner.

Specific Types of Court Bonds

1. Supersedeas - This bond is used to appeal a money judgment. Usually, the defendant would appeal a money judgment. This type of bond is risky because if the defendant loses the appeal, our bond supersedes the judgment and Minnesota Surety & Trust Company must pay the judgment and then bring an action against the principal for the money. We will not write this type of bond without full cash collateral.

2. Cost Bond - This bond is usually required for all appeals. It simply guarantees that the appellant pays the costs incurred by the winning party in the event that the appeal is lost.

3. Replevin Bond - Used by the plaintiff to obtain property he claims the defendant is wrongfully retaining. Defendant may file a counter-replevin bond but it is more risky. This bond is usually ordered by the court after a hearing to determine the amount of the bond. The amount of the bond is determined by the damages that could flow from the replevin should the plaintiff be wrong.

4. Attachment Bond - This bond is used to dissolve a writ of attachment in order to free the property subject to the attachment for sale or other disposition. A writ of attachment is used primarily to seize the debtor's property in order to secure the debt or claim of the creditor in the event that a judgment is obtained. Once the bond is issued, the plaintiff looks to the bond to satisfy his judgment if one is obtained.

5. Injunctive Bond - Used when plaintiff obtains a restraining order preventing the defendant from doing something. Again, the bond amount is determined after a hearing on the question of the damages flowing from the injunction.

Notary Bond
Guarantees that the notary faithfully discharges his/her duties as a notary public. Basically, the Notary will want to make sure that they check the identification of the person signing the subject document and should keep a record of signatures notarized.

Performance/Payment bond
A performance bond provides that the work of the contractor will be fully and satisfactorily completed in accordance with the Contract Document, which, by definition, includes the Agreement between contractor and owner and all modifications issued subsequent thereto, the General Conditions, Drawings and Specifications. The Bond incorporates, by reference, all of these contract documents, with which the contractor must conform.

A payment bond is the companion to the performance bond. Unlike the performance bond, where right of recovery accrues only to the owner/obligee, the right of recovery under a payment bond usually extends to all unpaid claimants, who are legally entitled to bring separate actions directly against the contractor and surety. As the name implies, the payment bond guarantees that the unpaid claimants will be paid. State statutes usually govern in defining eligible claimants, except on federal work where the Miller Act controls.

Oil Well Plugging bond
This type of bond is required by Statute and requires the oil well operator to comply with all of the requirements in the applicable statute as it relates to the operation and or drilling of an oil well. These types of bonds are very risky and have an extremely long "tail". They are not discharged by the state until the owner ceases operations and has plugged the well. These bonds are not written without collateral.

Motor vehicle dealer bonds
This bond is needed in order for a Motor Vehicle Dealer to obtain a license to sell used motor vehicles. The bond guarantees that the dealer comply with all of the requirements in the state statute governing commerce in used motor vehicles. The bond also indemnifys any and all persons, firms and corporations for any loss suffered by reason of fraud or fraudulent representations made in violation of the state statute. This is a risky bond and is not written without collateral.

Public Official Bond
Elected or appointed public officials in favor of a state or other political subdivision need this bond. The bonds guarantee the official will faithfully perform the duties of their office as provided by law. Included in this class are bonds required from deputies and subordinate employees of public officials.

This is one of the most desirable classes of bond. The smaller bonds, particularly those required by officials who do not handle large amounts of public funds, are written freely for reputable applicants. No application is required for official bonds that do not exceed $25,000.00.

Treasurers and other Money-Handling Officials. (Bonds exceeding $25,000.00) Desirable and readily written for reputable and qualified applicants where:

1. the public funds coming into the official's hands are deposited according to law in banks properly designated by resolution of the governing body or board;

2. the applicant's deputies and subordinates are adequately bonded;

3. if the applicant is a "hold-over", i.e., if he has occupied the same office for the term immediately preceding, his accounts have been examined as of a recent date and found to be correct.

Tax Collectors. In some states, Tax Collectors are responsible not only for all funds coming into their hands, but also for uncollected taxes. Where the bond carries such liability, it will be written only when the conditions applying to treasurer's bonds (see preceding paragraph) are fulfilled, and in addition when the tax collector has been exonerated in the manner provided by law from liability for any uncollected taxes.

Where a political subdivision has a number of deputies, clerks and other subordinates, it is to its advantage to bond all its employees under a Public Employees Blanket Bond. For premium computation purposes, the Company should be furnished with a list of all the employees, giving their positions. Please use the Blanket Fidelity and Public Employee application for this purpose.

Lost Instrument Bond
This bond is needed for owners of lost, stollen or destroyed securities. The owner files the bond to indemnify the issuer of the securities against loss resulting from furnishing duplicates of the lost instruments.

This bond is generally desirable for reputable and financially responsible applicants, where the lost securities are not negotiable; and where no form of assignment, either printed on the securities or as a separate instrument, has been signed in blank.

Where a special form of lost security bond is required, submit bond form along with the completed application. Company bond forms are available for use where a standard form is acceptable to the obligee (issuer of the instrument).

License and Miscellaneous Bonds
Required by states, cities and other licensing authorities from holders of licenses to engage in certain businesses, or permits to exercise certain privileges.

Most of the smaller license bonds guarantee simply that the principal will conduct his business in accordance with the laws or ordinances regulating such business are very desirable.

The License and Permit Bond classification includes, however, some bonds that are required by laws imposing upon the licensee and his surety a liability greater than that of simple compliance with the law. Also, there may be certain hazards inherent in the particular business engaged in by the principal. The liability under such bonds should be analyzed and the bond should be underwritten accordingly. Among license bonds of a hazardous nature are the following:

• Tax bonds that guarantee the payment of taxes (gasoline, cigarette, etc.);

• Commission merchants, livestock dealers, and similar bonds guaranteeing payment of moneys due for products sold or purchased;

• Warehouse bonds; Collection Agencies; Housemovers or Wreckers; Blasting or Storing Explosives; Oil and gas drilling bonds; Forfeiture bonds which are forfeited to the licensing authority upon violation of law; etc.

This classification is a "catch-all" for bonds that do not fit into any of the main classes. Underwriting considerations vary too widely to make possible any blanket rules, however for most types the financial condition and credit record of the applicant is of primary importance in determining the acceptability of a particular bond.

Employee Dishonesty Bonds
Employee Dishonesty Bonds indemnify employers against loss through the dishonesty of any of their employees. All employees are covered without being specifically named. All new employees are covered automatically.

This is a desirable class of business, with only a few exceptions. To be avoided are:

Risks that consist mostly of outside employees such as outside salesmen and routemen who make collections, finance or small loan companies and risks that have developed an unsatisfactory loss record.

Employee dishonesty is today a normal business risk and should be insured in the same manner as fire and other hazards that may bring catastrophic losses. The average employer, however, still does not realize this. There is need to bring this problem to the employer's attention. The trusted employee is the one most likely to cause the biggest loss.

Fidelity Bonds
Fidelity Bonds indemnify private employers against loss sustained through the dishonesty of bonded employees. Schedule Fidelity Bonds are written in those instances where the number of employees to be bonded is small. Where an employer has more than two or three persons in his employ, it is usually to his advantage to purchase blanket coverage as described in the previous section.

This is a desirable class of business, with only a few exceptions. The fidelity risks to be avoided are:

• Outside salesmen or routemen making collections;

• Finance and small loan companies;

• Employees not under the direct supervision of the employer.

On some particularly desirable classes such pension and profit sharing plans, application is waived. For more detail, contact the bond department.

Bail Bond
Bail bonds are very risky and only written by licensed professional bail bond agents. Usually these agents specialize in only bail bonds. The bail bond guarantees that the defendant will appear in court when ordered to do so.

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