What is a Blanket Bond?

Article Details
  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 13 October 2019
  • Copyright Protected:
    Conjecture Corporation
  • Print this Article
Free Widgets for your Site/Blog
Google recognizes a unit of measure called a smoot, which is equal to 5'7", the height of MIT alum Oliver Smoot.  more...

November 15 ,  1867 :  The world's first stock ticker debuted in New York City.  more...

The blanket bond is a form of insurance coverage that provides protection for brokerages in the event of employee error or dishonesty, as well in the case of theft. Blanket bonds are also often carried as part of the broad insurance coverage for other types of financial institutions that are responsible for managing the financial assets of individuals and corporations.

There are two common forms of the blanket bond. The commercial blanket bond provides protection for an employer that is far reaching in scope and in application. A commercial blanket bond provides a maximum amount of coverage in the event of any one loss, regardless of the number of employees involved in the circumstances that created the loss. With the commercial type of blanket bond, the position of the employee or employees within the firm is not a factor. Anyone from the janitor to the president of the firm may be involved and the loss will still be covered.

The second example of the blanket bond is known as a position blanket bond. With the position style of blanket bond, the employer is insured against the actions of employees who hold specific positions within the firm. The amount of coverage is based on the particular position covered. In the event that several employees are involved in the loss, the blanket bond will allow for maximum coverage that is a cumulative total of the insured amount for all positions involved in the loss.


Blanket bonds provide a sense of security to brokerage firms and other businesses that work with the assets of investors. Providing coverage in the event of theft or grave errors on the part of employees makes it possible for investors to recoup their losses, and for the investment firms to work through the issue and continue to operate. From this perspective, the blanket bond can be viewed as a tool that helps to ensure that the investor will be taken care of, no matter which circumstances may occur within the brokerage.


You might also Like


Discuss this Article

Post your comments

Post Anonymously


forgot password?