INSURANCE

MONEY AND FIDELITY GUARANTEE INSURANCE

MONEY INSURANCE

The term ‘money’ here means cash, bank and currency notes, cheques, postal and money orders, e.t.c all belonging to the insured or any principal or employee of the insured while deposited with the insured.

This policy cover pays compensation to the insured in the event of money being stolen either from the business premises of the insured or while it is being carried to or from the bank.

  1. Money in transit: This is the money carried by the insured or his authorized representative or sent by registered post described as cash, bank or currency notes, open cheques, etc.
  2. Money in safe: These include money in locked safe or strong room outside business hours.
  3. Money in personal custody: This is the money in the custody of designated officers such as management staff, directors, and salesmen.

Under money insurance policy, the insurer is not liable to pay among others for loss or damage due to.

  1. Fraud or dishonesty of any employee of the insured unless such loss is discovered as in most cases, some days of its occurrence.
  2. Error of omission leading to shortage of mechanical or electrical breakdown.
  3. The use of counterfeit money, etc.

 

FIDELITY GUARANTEE INSURANCE

Fidelity is the act of faithfulness, loyalty and accuracy. Fidelity guarantee is the insurance policy against the fraudulent act or dishonesty or disloyalty of a person holding position of trust in an organisation. This could be taken upon the dishonesty of a company treasurer, accountant, cashier which if they default in their duty, the fidelity guarantee insurance will compensate the insured up to the tune of the default.

This also extends cover to losses due to mistake made by persons in position of trust leading to winding – up of an organisation by mistake in law. Fidelity guarantee is granted under the following headings:

1) Commercial guarantee: This provides the employer with compensation for direct losses sustained through the act of dishonesty of an employee in the course of his employment. The policies granted under this are:

a) Individual policy: This is based on employer’s name for a stated amount.

b) Collective policy: In this case, more than one employee is covered. It could be:

  • Named collective policy where names, duties and guaranteed employees are clearly stated along with the amount to be guaranteed.
  • Unnamed collective (position policy) policy: In this policy, employees are covered on category basis e.g. manager, cashier.

 

2) Blanket policy: This is an arrangement where cover granted is either for all listed categories of employees such as security staff, accounting staff or staff members on the payroll of the insured. This policy is issued without specifying the names and positions of employees listed.

 

BOND

Bond is a form of guarantee that a specific performance will be done. In case of nonperformance, the insurance company will be responsible. A bond could be a local government bond which is similar to that of commercial guarantee. It could also be government bond such as customs and excise bond.

1) GOVERNMENT BOND: This guarantees compensation in respect of revenue lost due to improper use of dutiable articles or liquids and nonpayment of duties. Examples are customs and excise bond.

Customs bond are duties or taxes imposed on goods imported or exported while excise duties are those duties imposed on goods produced and consumed at home. The bonds are taken by the government as security for the payment of customs and excise duties, so that when the manufacturers fail to pay the duties the surety will have to pay the duty.

 

2) LOCAL GOVERNMENT BOND: This guarantees the employees under the service of the local government for loss of money or other properties belonging to the local government or in their custody which they are legally responsible for, and which they must have lost due to act of dishonesty or fraud committed on their own within the period of insurance while in service.

 

3) COURT BOND: This type of bond is always requested for by court for those officers to be entrusted with the property of an individual pending the determination of the investigation. Examples are cases involving the property of mentally retracted persons.

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