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Definition: Banker's Blanket Bond
This is an insurance for the bank to cover against the losses which might happen due to criminal act/ dishonest act carried out by employee. Usually a bank can choose to insure a specific employee like a bank manager. It can also choose to insure itself so that any prospective employee who joins the bank and takes up any position is automatically covered by the insurance rules. Criminal acts like robbery and forgery by bank employee are covered under this insurance provision.
Earlier, a bank’s major activities were about basic retail transactions such as accepting deposits, granting loans and transactions of currencies. The risks to a bank were mostly robbery, forgery of securities and other documents, and theft by dishonest employees.
However with technological advancement and evolution of banking practices the coverage has been updated the following Insuring clauses are important to note:
• Clause One: Fidelity. This covers loss resulting from dishonest/ fraudulent act committed by the employee. It requires to prove the intent of the employee to cause the bank financial harm or gain improper financial gain
• Clause Two: On Premises. This covers losses related to property of bank or even that of customer if it happens to be within bank’s premises
• Clause Three: Transit. This covers loss of property of the bank/under custody of bank’s employee while in transit
• Clause Four: Forgery and Alteration.
• Clause Five: Securities forgery.
• Clause Six: Counterfeit Currencies
• Clause Seven: Loss of property due to vandalism, burglaries and robberies.