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Banker's Blanket Bond

Banker's Blanket Bond

What Is a Banker's Blanket Bond?

A banker's blanket bond (BBB) is a fidelity bond purchased from an insurance broker that safeguards a bank against losses from different crook acts carried out by employees. A banker's blanket bond is otherwise called a blanket fidelity bond. A few states require blanket bond coverage as a condition of operating a bank.

How a Banker's Blanket Bond Works

A fidelity bond is insurance coverage against losses that stem from the exploitative acts of employees. The banker's blanket bond might be applied to individual employees or job positions in the company.

For instance, a bank can safeguard a specific bank manager or decide to protect the actual position with the goal that any employee who takes on those job obligations is naturally covered. A portion of the types of losses that emerge from employee criminal acts covered by a blanket bond incorporate burglary carried out by an employee and fabrication.

Losses from fraudulent activities carried out by non-employees are additionally covered under the bond policy.

A banker's blanket bond is an insurance policy that gives coverage against the direct financial loss from falsification, cyber fraud, physical loss of or modification to property, extortion, and employee untrustworthiness. The employee must have committed these fraudulent acts for personal gain for the company to make any claim against the bond.

This means the bond doesn't cover the activities of employees who commit unscrupulous transactions to cause a financial institution to seem better. For instance, losses that outcome from an employee that cooks the book or participates in other creative strategies to put the company in a better light than it actually is will be exempt from coverage.

The blanket fidelity bond is classified as a first-party coverage since it covers the actual institution, not the account holders or shareholders. Nonetheless, this bond isn't to be taken as a form of credit insurance.

A banker's blanket bond doesn't expand credit or expects the credit risk of the borrowers. Credit risk management is a part of the bank's core operations and is the sole responsibility of the financial institution. The blanket bond manages extra-standard occasions connected with employee crimes and is a regulatory requirement in certain states expecting banks to get fidelity bonds to operate.

Special Considerations

Estimating the outer level of risk and loss of money and securities due to fraud or cybercrime, for example, ransomware, can be generally simple to decide compared to financial loss that may inside emerge due to employee shenanigans. Thusly, concluding the vital amount of bond coverage that a financial institution requires can introduce a serious test.

Insurers normally dissect the number of employees and their obligations, the employee turnover rate, the average level of exposure from daily business operations, the types and average amount of transactions led daily, and the amount of cash held by the bank.


  • Contingent upon the state, a bank might be required to purchase a blanket bond to operate.
  • A banker's blanket bond is a fidelity bond that safeguards a bank on the off chance that an employee completes a crook act like taking money from a client's account.
  • A banker's blanket bond likewise covers losses from fraud carried out by non-bank employees.
  • Fraud and burglary are types of losses covered by a blanket bond.