Insurance Bonds
2 types of blanket bonds - ANS-1. commercial blanket
2. blanket position
\3 parties involved in bonds - ANS-1. obligor (underwritten employee/contractor)
2. obligee (insured employer/project owner)
3. surety (insurance company)
\A fidelity bond is a type of ____ bonds - ANS-blanket
\blanket position - ANS-1. per employee (financial institutions)
2. covers all employees by job title
3. the policy limit applies for each employee (so if 2 employees collaborate and steal
20k, the company would get 10k from each, so would be back to where they started
at 20k)
4. if the negligent employee cannot be found, the bond pays as if only one employee
was involved
5. recovery period is bonding period + 2 years
\commercial blanket - ANS-1. per loss (typical for retail stores)
2. covers all employees
3. automatic coverage on new employees without any notice
4. the policy limit applies for each loss, not each employee involved (EX: 2
employees collaborate and steal 20k, only covers the amount of a bond (which could
be 10k) so company is out 10k
5. recovery period is bonding period + 1 year
\example of the order in which things happen in case of a fideltity bond loss - ANS-1.
surety company pays the obligee for an obligation not met by the obligator (only pays
the amount of the bond)
2. the employer can attempt to recover if they are owned more than the bond
3. the surety company will subrogate their loss to the obligor (employee) and get the
money back for which they paid the obligee (employer)
\fidelity bonds common provisions - ANS-1. covers all fraudulent or dishonest acts of
the covered employees
2. inventory shortages are not covered, unless it can be established that the loss
was caused by a covered employee
\fidelity bonds cover direct losses of - ANS-1. money
2. securities
3. other property, including merchandise
\if the loss is greater than the bond amount, the obligee (employer) GETS THE
FIRST RECOVERY FROM THE ___ - ANS-OBLIGOR
\losses under a surety bond are paid by whom? - ANS-surety company
\Surety Bond - ANS-guarantee that an obligor (construction contractor) will fulfill a
promise to perform
\surety bonds are __ - ANS-non-cancelable
2 types of blanket bonds - ANS-1. commercial blanket
2. blanket position
\3 parties involved in bonds - ANS-1. obligor (underwritten employee/contractor)
2. obligee (insured employer/project owner)
3. surety (insurance company)
\A fidelity bond is a type of ____ bonds - ANS-blanket
\blanket position - ANS-1. per employee (financial institutions)
2. covers all employees by job title
3. the policy limit applies for each employee (so if 2 employees collaborate and steal
20k, the company would get 10k from each, so would be back to where they started
at 20k)
4. if the negligent employee cannot be found, the bond pays as if only one employee
was involved
5. recovery period is bonding period + 2 years
\commercial blanket - ANS-1. per loss (typical for retail stores)
2. covers all employees
3. automatic coverage on new employees without any notice
4. the policy limit applies for each loss, not each employee involved (EX: 2
employees collaborate and steal 20k, only covers the amount of a bond (which could
be 10k) so company is out 10k
5. recovery period is bonding period + 1 year
\example of the order in which things happen in case of a fideltity bond loss - ANS-1.
surety company pays the obligee for an obligation not met by the obligator (only pays
the amount of the bond)
2. the employer can attempt to recover if they are owned more than the bond
3. the surety company will subrogate their loss to the obligor (employee) and get the
money back for which they paid the obligee (employer)
\fidelity bonds common provisions - ANS-1. covers all fraudulent or dishonest acts of
the covered employees
2. inventory shortages are not covered, unless it can be established that the loss
was caused by a covered employee
\fidelity bonds cover direct losses of - ANS-1. money
2. securities
3. other property, including merchandise
\if the loss is greater than the bond amount, the obligee (employer) GETS THE
FIRST RECOVERY FROM THE ___ - ANS-OBLIGOR
\losses under a surety bond are paid by whom? - ANS-surety company
\Surety Bond - ANS-guarantee that an obligor (construction contractor) will fulfill a
promise to perform
\surety bonds are __ - ANS-non-cancelable
