Haris Ashley
If you handle cash or other people's property as part of your job, you may be eligible for bonding cash handling insurance. This type of insurance, also known as fidelity insurance, protects your employer against theft or loss of assets by dishonest employees. It is a common part of an overall business insurance package and can be purchased through a surety company or the company that handles your business insurance policies. Staff at the bonding company will evaluate your background, including a criminal history and credit check, to determine your eligibility for a bond. The cost of the bond will vary depending on the type of business and the value of the assets handled.
| Characteristics | Values |
|---|---|
| Who needs bonding? | Anyone who "handles" union funds or property, including officers and employees with authority to sign checks |
| Bonding requirements | Minimum coverage of 10% of the funds handled during the preceding fiscal year up to a maximum of $500,000 |
| Bonding coverage | Must be set at the start of each fiscal year and can be amended if the amount of funds handled increases |
| Bonding companies | Must be obtained from a company on the U.S. Treasury Department list of approved companies |
| Eligibility | Requires a clean criminal history, good credit, and a low risk of fraudulent or dishonest acts |
| Types of bonds | Cash bonds, surety bonds, fidelity bonds |
| Bond cost | Application fee (starting at $100), premiums |
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What You'll Learn
What is bonding cash handling insurance?
Bonding cash handling insurance, also known as fidelity insurance, is a type of insurance agreement that protects employers against theft, embezzlement, forgery, robbery, and other criminal acts by employees who handle cash or other liquid assets. It is designed to reimburse the employer for any financial losses caused by the dishonest acts of their employees. This insurance is commonly purchased by businesses that have employees who handle cash or other valuable assets, such as financial consultants, bookkeepers, and janitorial services.
The bonding process typically involves screening individuals before adding them to the policy, and the insurance company may reject applicants with a high risk of committing fraud or other dishonest acts. This screening process includes an extensive background check, including a review of the applicant's criminal history and credit score. Good credit and a clean criminal record are generally required for eligibility.
The cost of bonding cash handling insurance varies depending on the type of business, the number of employees covered, and the value of the assets they handle. Employers may need to pay an application fee and ongoing premiums to maintain the insurance policy.
In the United States, bonding requirements are mandated by the Labor-Management Reporting and Disclosure Act of 1959 (LMRDA) and the Civil Service Reform Act of 1978 (CSRA). These laws require unions and certain officers or employees of labor organizations to obtain bonding coverage to insure against potential financial losses. The bonding amount must be set at the start of each fiscal year and is typically calculated as a percentage of the funds handled during the previous year, up to a specified maximum.
Overall, bonding cash handling insurance is an important tool for businesses and organizations to protect themselves from financial losses due to employee dishonesty or theft. It provides a layer of security and reassurance, helping to mitigate risks associated with cash handling.
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Who needs bonding cash handling insurance?
Bonding cash handling insurance is a type of insurance that protects employers against theft and financial loss by their employees. It is also known as fidelity bonds or surety bonds. This insurance is typically required for employees who handle cash or other liquid assets, such as deposits in financial institutions, certificates of deposit, and corporate stocks. Employers may also choose to bond employees who do not handle cash but may be in a position to steal something else of value.
Any person who "handles" union funds or property must be bonded. This includes individuals who receive dues or fees from members, as well as officers or employees who have the authority to sign cheques on the union's account. National and international unions may purchase bonding coverage for their affiliates, and it is required that every person who "handles" funds is covered. The bonding coverage amount must be set at the start of each fiscal year and can be amended if the amount of funds handled increases.
To be eligible for bonding cash handling insurance, individuals typically need to undergo a background check, including a criminal history review and a credit check. Bonding companies look for good credit and a clean criminal history, especially with no history of theft or fraudulent activities. Individuals may need to pay an application fee and premiums for their bond.
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How much does bonding cash handling insurance cost?
Bonding cash handling insurance is a type of surety bond that protects the owner from financial loss. The cost of bonding cash handling insurance varies depending on several factors. Firstly, the amount of bonding coverage needs to be set at the start of each fiscal year and can increase if there is a rise in the amount of cash handled during that time.
Secondly, the cost of a surety bond is determined by the contract amount, not the bond amount. The typical cost for a surety bond ranges from 0.5% to 4% of the total contract price. The rate is often quoted as a dollar figure per $1,000 of contract value. For instance, on a $250,000 project at 2.5%, the premium would be $6,250 (or $25 per $1,000). Some companies offer tiered pricing, where rates decrease as the contract size increases.
Additionally, certain positions or industries may legally require a surety bond, and an application fee may be necessary. This fee can vary widely, starting at $100. The bonding company will also conduct a background check, including a credit check, to determine eligibility and the cost of the bond. A clean criminal history and good credit are generally required to obtain a bond.
It is important to note that surety bonds are not considered insurance, and the premium is intended to compensate the surety company for underwriting the bond, not to cover expected losses. The cost of bonding cash handling insurance can be influenced by various factors, and it is recommended to use a surety bond calculator or consult a trusted surety provider to obtain a precise estimate.
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What does bonding cash handling insurance cover?
Bonding cash handling insurance, also known as employee crime insurance, is designed to protect organisations, companies, and unions from financial losses due to fraud, theft, or embezzlement. It is a type of insurance agreement that guarantees reimbursement for financial losses caused by fraudulent or dishonest acts, including theft, embezzlement, and forgery. This type of insurance is particularly relevant when individuals within the organisation are entrusted with handling cash or other valuable assets.
The bonding requirements are typically based on the value of funds handled and the risk of financial loss. For example, in the context of unions in the United States, the law mandates that individuals handling union funds or property must be bonded for at least 10% of the funds handled in the preceding fiscal year, up to a maximum of $500,000. This includes union officers, employees with financial responsibilities, and those with authority to sign cheques.
Bonding insurance can also be tailored specifically for nonprofit organisations, where funds may be handled by multiple people, such as officers, volunteers, and committee members. Nonprofit bonding insurance, such as Bonding Plus, covers losses related to employee dishonesty, forgery, alteration, and theft of funds, both on-site and off-site.
In terms of eligibility, bonding insurance providers will conduct background checks, including criminal history and credit checks, to assess the risk of insuring an individual or organisation. A clean criminal history and good credit history are generally favourable factors in obtaining bonding insurance.
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How do you get bonding cash handling insurance?
Bonding cash handling insurance, also known as fidelity bonds, is a type of insurance agreement that guarantees reimbursement for any financial losses caused by fraudulent or dishonest acts, such as theft, embezzlement, or forgery. This type of insurance is commonly required for employees who handle cash or have access to financial assets to protect the business or organization from potential losses due to misconduct.
To obtain bonding cash handling insurance, there are several steps and requirements to consider:
Eligibility and Background Checks:
Bonding companies will conduct extensive background checks on applicants to assess their eligibility for bonding insurance. This includes evaluating an individual's credit history, work history, and criminal record. Bond providers look for good credit, stable employment history, and a clean criminal record, particularly regarding any instances of theft or dishonest behaviour.
Application Process and Fees:
Individuals seeking bonding insurance may need to secure the bond through a surety company, depending on their position and industry. Applicants should be prepared to pay an application fee, which can vary but typically starts at $100. In addition, there will be premiums associated with the bond, which act as a form of insurance policy.
Bond Amount and Coverage:
The amount of bonding coverage needs to be set at the start of each fiscal year and may change based on the amount of funds handled. In the case of unions, the LMRDA (Labor-Management Reporting and Disclosure Act) requires bonding for at least 10% of the funds handled during the previous fiscal year, up to a maximum of $500,000.
Approved Bonding Companies:
It is important to ensure that the bonding company is on the U.S. Treasury Department's list of approved companies. The law prohibits placing bonds through agents or brokers or with companies where there may be a conflict of interest with union representatives. National and international unions can assist in determining if a company is approved and provide guidance on bonding requirements.
By following these steps and meeting the eligibility criteria, individuals can obtain bonding cash handling insurance to protect themselves and their organizations from financial losses due to misconduct or dishonest acts.
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Frequently asked questions
Bonding cash handling insurance, also known as fidelity insurance, is insurance protection against theft of assets by dishonest employees.
Any business with employees who handle cash should have bonding cash handling insurance.
Bonding cash handling insurance covers losses sustained by any employee who is bonded and losses to a client of the business due to an act of one of the employees.
You can buy fidelity bonds through the company that handles your business insurance policies.
Cash bonds only involve two parties, you and the owner. In a surety bond, there is a third party, the surety company, which guarantees the payment of a debt or performance of a contract.
