What is a Commercial Blanket Bond?

Commercial blanket bonds are used by employers to protect themselves from losses resulting from the disloyal acts of employees. It is blanket coverage of all employees of a company provided by the employer. Commercial blanket bonds protect employers from losses due to embezzlement, theft, forgery and other fraudulent acts perpetrated by a company's employees. The commercial blanket bonds often serve as a form of insurance or liability coverage for employers.

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How is a Commercial Blanket Bond Used? 

There is a benchmark or limit to the amount of monetary damages that the commercial blanket bonds cover. Regardless of the number of employees that are responsible for a mischievous or fraudulent actin an organization, there is a maximum loss limit that the employer can claim. Commercial blanket bonds are otherwise called fidelity bonds or aggregate penalty bonds. These types of bonds offer liability coverage to employers against losses that might be incurred from theft, forgery or embezzlement perpetrated by employees. Commercial blanket bonds often cover the activities of all employees but most importantly, new employees of a company. Claims can be made by a company when there is evidence that a crime has been committed by employees that cause losses to the company. Commercial blanket bonds cost companies or employers money depending on the number of employees to be covered by the liability coverage. Different policy providers also charge varying amounts for commercial blanket bonds. Regardless of the amount charged or paid for commercial blanket bonds, there is a maximum dollar value that the coverage covers.

Example of Commercial Blanket Bond

How a commercial blanket bond works can be understood using the illustration below; Company XYZ is a construction that has several employees doing different works. If some of the employees collude to steal a machine belonging to the company or change figures of materials needed causing a loss for the company, commercial blanket bonds can cover this liability. For instance, if employees steal materials and equipment valued at $50,000 and an employer has a commercial blanket bond worth $150,000 if the employer can provide evidence of the theft, the claims will be paid and deducted from the maximum loss limit of the coverage.

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