LABOR AND
MATERIAL BOND: A
bond given by a contractor to guarantee payment for the labor and
material used in the work which he/she is obligated to perform under the
contract. This liability
may be contained in the performance bond, in which case a separate labor
and material bond (payment bond) is not given.
LIABILITY:
This is a broad term denoting any legally enforceable obligation.
LIBEL - BOND TO DISCHARGE
OR RELEASE: When a
warrant for the seizure of a ship has been issued, the marshal is
required to stay execution of the process, or discharge the ship if
process has been levied, on receiving from the owner of the ship a bond
or stipulation conditioned to comply with the decree of court in the
action.
LICENSE BOND:
Used interchangeably with the term "permit bond" to describe bonds
required by state law, municipal ordinance or regulation, to be filed
prior to the granting of a license to engage in a particular business or
a permit to exercise a particular privilege.
Such bonds provide payment to the obligee for loss or damage resulting
from violations by the licensee of the duties and obligations imposed
upon him/her.
LIEN:
A charge upon real or personal property for the satisfaction of a debt.
LIMIT OF LIABILITY:
The maximum amount which a surety company will pay in case of loss.
Sometimes called the bond penalty.
LOSS RATIO:
The percentage of losses to premiums.
LOST INSTRUMENT BOND:
A bond given by the owner of a valuable security (stock, bond,
promissory note, certified check, etc.) which is alleged to have been
lost or destroyed. It
protects the issuer of the security against loss which may result from
the reinsurance of a duplicate or, in some instances, payment of cash
value thereof.
MAINTENANCE BOND:
The normal coverage provided by a maintenance bond is a guarantee
against defective workmanship or materials. However, maintenance bonds
sometimes incorporate an obligation guaranteeing "efficient or
successful operation" or other obligations of like intent and purpose.
MECHANICS LIEN - BOND TO
DISCHARGE: A lien
against real estate may be filed for an amount claimed to be due for
labor or materials furnished for the construction of a building or other
improvement upon the property.
Pending final determination of the owner's liability, the owner may
discharge the lien by giving bond conditioned for the payment of any
amount that may be found due to claimant with interest and costs.
MINIMUM PREMIUM:
The least amount a surety company may charge for a particular bond for a
designated period.
MISCELLANEOUS INDEMNITY
BONDS: Bonds which do not fit any of the well recognized divisions
or subdivisions.
MORAL HAZARD:
The possibility of loss caused or accentuated by dishonesty or
carelessness of the insured or others.
