Chapter 4

Fidelity bonds are a form of business insurance that offers an employer protection against losses, either monetary or physical, caused by it employees’ fraudulent or dishonest actions.

The insuring agreement is the portion of an insurance policy for which the insurer promises to make payment to or in behalf of the insured.

Insuring agreements outline a broad scope of coverage, which is then narrowed by exclusions, and definitions.

A discovery form of policy allows for coverage of loss as long as the policy is held after the time of the losses discovery.

A loss-sustained form of policy only allows for the payment of loss if the loss was both sustained and discovered during the policies coverage.

The limit of liability may be considered as an aggregate amount and/or a single loss amount.

The aggregate amount of liability is the minimum amount an insurer would have to pay due to loss over a given policy agreement.

A single loss limit of liability is the maximum amount an insurer would pay to an insured throughout the duration of a policy.

________ is written for only the individual, and only covers the individual named in the bond.

_________ is a comprehensive policy that does not require the distinction of individuals, rather the policy covers against the loss from all employees for which the policy or bond is granted.

________ allows for coverage of all employees named

________ covers the loss that may be incurred by a certain positioned employee.

Financial institution bonds are used to insure banks and other financial institutions against employee dishonesty, burglary, robbery, forgery, and similar crime exposures.

Insurance companies:

Securities Dealers:

Credit Unions

Finance Companies

Banks and Thrifts:

A pension bond guarantees that a state or local government pays into its employees pension funds as obligated.

Coverage form O serves as protection for a municipality or government agency against the dishonest workings of a public employee, and may often be referred to as public employee dishonesty coverage.