Definition - What does Blanket Bond mean?
A blanket bond is a type of insurance coverage that protects financial institutions from various types of hazards that can occur during the course of business. Blanket bonds typically protect financial institutions from employee dishonesty. Employee dishonesty can include the performance of acts such as fraud, theft, and forgery. Blanket bonds are also known as fidelity bonds.
Insuranceopedia explains Blanket Bond
Employee dishonesty can be a significant problem for financial institutions such as banks. The reason is because employees of a bank often have access to large sums of cash, other assets, and sensitive information. So, many states require banks to have blanket bonds in order to remain in operation. Blanket bonds can help banks stay afloat if things happen such as a large sum of money suddenly disappearing, or a number of forged checks making their way through the system.