Blanket Bond

Posted in Finance, Accounting and Economics Terms, Total Reads: 1057

Definition: Blanket Bond

A Blanket Bond, also known as Fidelity Bond, is a bond that covers different people, projects or properties from employee fraud. It means that the bond compensates a business from loss due to fraud, embezzlement or negligence by employees in positions of trust.

Banker’s Fidelity bonds are a type of blanket bonds which are purchased from an insurance company to protect banks from loss of criminal activities by the employees like robbery, forgery or fraud. Some banks even require banker’s blanket bonds for operation.

Companies applicable for blanket bonds are those organizations that are involved in providing financial services to third parties. Blanket bonds give the large companies assurance that their funds and property are safeguarded against various losses.

It also means insurance coverage against employee dishonesty used by various financial institutions.

For instance, a banker’s blanket bond can be taken to insure against a specific bank employee like manager or against the position of a manager itself. This helps in insuring against any person who takes up the job. In case of loss, the amount of bond is equal to the amount required to reimburse the complete loss.

Difference between insurance and blanket bonds is that blanket bonds protect against losses due to activities which occur from within the company. Insurance policies usually cover damages occurred due to external sources like property damage etc.

The various losses covered in a blanket bond due to:

• Dishonesty of employees in the company that has been insured

• Damage of property within the insured company due to employees

• Transit loss, including theft and physical damage of property during transportation

• Forgery of cheques

• Forgery of securities and bonds

• Damage to the insured company due to working with securities

• Counterfeit Currency

• Damage to the property of insured company caused by third parties


Hence, this concludes the definition of Blanket Bond along with its overview.

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