A. M. Best Company, Inc. provides an opinion of a company's financial strength, operating performance and market profile based on a comprehensive quantitative and qualitative evaluation. They rate companies and use symbols such as "A++", "A+", "A", "A-", "B++", and "B+" to represent their overall rating. Some obliges will require that a surety have a minimum rating as determined by A. M. Best.

A bid bond is an obligation undertaken by the bidder promising that the bidder will, if awarded the contract, enter into the contract and furnish the prescribed payment and performance bond(s) within a specified period of time.

An indemnity agreement is a contract between two parties in which one party agrees to assume (indemnify) all liability and risk if a third party files a claim or other action against the protected (indemnified) party.

These bonds are required by state or federal law, municipal ordinance, or by regulating agencies as a condition preceding the granting of a license to engage in a particular business or the granting of a permit to exercise a particular privilege. These bonds generally protect the public in the case that a bonded principal fails to fulfill his statutory obligation in the operation and conduct of his business. In general, the terms "License" and "Permit" are used interchangeably. Typical bonds in this category include Contractor's License, Motor Vehicle Dealer Bonds, Securities Dealers' Blue Sky Bonds, Employment Agency Bonds, Health Spa Bonds, Grain Warehouse Bonds, Liquor Bonds, and Tax Bonds.

The obligee is the party who receives the benefit of the bond.

A payment bond guarantees that the principal will pay laborers and suppliers associated with the bonded project.

A performance bond guarantees that the principal will perform the obligation according to the terms and conditions of the contract and protects the obligee from financial risk should the principal default or fail to do so.

The monetary amount paid to the surety as a fee in order to obtain the bond.

The principal is the party that undertakes the obligation to be bonded.

The surety guarantees the obligation will be performed.

A surety agency is a company or organization that represents a surety company or several surety companies or bonding companies in order to make surety bonds available to the public. Surety companies generally do not provide surety bonds directly to the public but rely on independent surety agencies to make the bonds available.