There are four main types of surety bonds; commercial bonds, contract bonds, court bonds, and fidelity bonds. Court bonds are not as common as commercial or contract bonds, and there are various different types of court bonds. The two main categories of court bonds are judicial bonds and probate bonds. Judicial bonds require a Principal (person required to purchase the bond) to pay a sum of money. Probate bonds require a Principal to perform duties as the laws and courts require.
Judicial bonds are required by a civil court in order to secure funds or assets. They are very difficult to underwrite, as evaluating the result of a court proceeding is rather difficult. The outcome will determine if there is a likelihood of a loss or bonds claim. These types of bonds will often come with a premium and additional collateral requirements. Premiums will not be returned, but if the bond does not have any claims, the collateral will be returned to the Principal after the obligations are fulfilled. There are many different types of judicial bonds including:
- Replevin Bonds – Replevin bonds are required when a plaintiff is recovering property from a defendant. Courts may require the plaintiff to purchase a replevin bond if the property is returned to the plaintiff before a settlement is reached. This is to protect the defendant’s interests if they were to win the case and have any damages to the property.
- Injunction Bonds – Injunction bonds are required to prevent a defendant from performing certain acts, such as a restraining order of an employer from an employee. While the court case is being conducted, the plaintiff may be required to purchase a bond in case the court favors the defendant. If the defendant suffers damages from an injunction that prevented them from working (as described above) they may make a claim on the bond.
- Attachment Bonds – Attachment bonds are purchased by the plaintiff who is often a creditor when a debtor’s property is seized. This ensures that if the court rules in favor of the debtor, the creditor will pay all legal costs and damages suffered by the defendant.
- Indemnity to Sheriff Bonds – These bonds are used to protect Sheriffs or other law enforcement officers if a court case requires the seizure of the defendant’s personal property by a plaintiff. If an investigation into personal property must be performed by a sheriff, a court can require an indemnity to sheriff bond be purchased by the plaintiff. These bonds protect the Sheriff from any losses or damages incurred while performing the seizure of personal property or being sued.
Probate bonds can also be referred to as fiduciary bonds. A fiduciary is a person or entity that has been granted power over another’s assets and well-being, by a court. A probate bond will be required by a court if an individual or entity is to care for another’s assets or well-being. This subcategory of court bonds includes the following specific bonds:
- Administrator Bond – An administrator bond is required in the event that a will does not name an executor to ensure the will is carried out as intended.
- Executor Bond – An executor bond protects the estate and management of assets contained in a will from being mismanaged by the executor of a will. Most probate courts will require this if an executor resides in a different state than the deceased who created the will.
- Guardianship Bond – A guardianship bond is also referred to as “custodian bond”. A probate court will require a guardian of a minor, elderly person, or disabled persons to post a guardianship bond. This bond ensures that the level of care set by the court is followed.
- Conservatorship Bond – A conservatorship bond protects the assets of an elderly, minor, or disabled persons’ assets. This is similar to a guardianship bond, except the monetary assets are being protected versus the actual care of the individual.
- Trustee Bonds – Trustee bonds are similar to executor bonds, but the trustee bond guarantees that the interests of the trust are carried out as the guidelines that were established by the beneficiary.