Unit 17 Flashcards
insurance companies reserve the right to cancel…
coverage for any employee (must be notified in writing 30 days before effective date of cancellation)
coverage for any employee is cancelled immediately upon discovery of…
any theft or dishonest act (employees, partners, officers, directors, members, managers even if occurred before being hired by named insured)
fidelity bonds
guarantee an employee’s honest discharge of duty and are written to protect an insured form dishonest acts by employee
insurance contracts include two parties
the insured and the insurance company
bonds are contracts between three parties
- principal
- surety
- obligee
principal
the party who promises to do or not to do a specific thing, this is the person or company bonded
surety
the party (often the insurance company) who agrees to be responsible for the loss that may result if the principal does not keep his or her promise
obligee
party to whom the principal makes the promise, and for whose protection the bond is being written
there are several types of fidelity bonds
- name schedule bonds
- position schedule bonds
- commercial blanket bonds
- blanket position bonds
name schedule bonds
cover each employee named on the policy schedule for the amount listen in the schedule
position schedule bonds
list positions in the company that are covered rather than the individuals who fill these positions
commercial blanket bonds
cover losses arising from the dishonesty of one or more employees acting separately or together
blanket position bonds
similar to commercial blanket bonds in that employees or positions are not specifically listed
- bonds limit applies separately to each employee involved in a loss
fidelity bonds
continuous and do not have an expiration date, may be terminated by the parties to the bond
like commercial crime forms, fidelity bonds provide
a discovery or cut off period for loses occurred during the term of the bond, but were not discovered until after its termination
