Why Banks Need Blanket Bonds

Blanket Bonds

What is a blanket bond? For those unfamiliar with bank insurance, the term might sound confusing; but it makes sense when you know what the individual words mean. A bond is a type of insurance purchased by a bank. The word blanket refers to something that covers, or blankets, all employees. So, simply stated, a blanket bond is an insurance policy covering a financial institution in case an employee commits a criminal act that causes the company to lose money or property.

Who Is Bonded

A bonded employee is one for whom the bank has an insurance policy in case he or she commits a dishonest or immoral act. For example, if an employee steals money, the insurance company would reimburse the bank for the amount stolen. Coverage is automatic upon being hired, so with a blanket bond, the bank is not required to present evidence as to which employee was dishonest.

Which Criminal Acts Are Covered

The insurance firm at www.fgib.com lists the following risks as being covered:

  • Documents forged
  • Counterfeit money accepted in good faith 
  • Money or property lost or stolen during delivery
  • Money stolen by employees
  • Property vandalized
  • Bad checks written or accepted

Blanket bonds are often required by law and are one of the many types of insurance usually required for banks.