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Dishonesty insurance is regarded as a field of surety ship with the same parties involved — the surety, the obligee, the principal. However, it works more like regular insurance; the employer suffers loss through dishonesty of the employee and is reimbursed for the loss by the insurance company. The surety or insurance company has a right of action against the dishonest employee. 

In addition to the basic protection provided by the bond, the employer enjoys the psychological advantage that the employees know they are bonded and may expect prosecution by the State and/or bonding company if they produce a loss. Also, the employer is encouraged to avoid losses by adopting efficient accounting, audit, inventory and other business control methods. 

Coverage 

There is a statewide public employees blanket bond utilized by the State University System. A brief summary of the policy follows: 

1. Insuring Agreement I - Honesty Blanket Bond coverage covers loss sustained by the insured through any fraudulent or dishonest act or acts committed by any of the employees, acting alone or in collusion with others, during the Bond Period, to an amount not exceeding in the aggregate the amount stated in the limits of liability applicable to this agreement. 
2. Rider - attached to the policy extends the definition of “Employee” to include any student enrolled in a school under the jurisdiction of the insured while handling or having possession of property or funds in connection with student activities or while handling or having possession of United States Savings Bonds or Stamps or funds in connection with the purchase or sale of such Bonds or Stamps. 

Premium Basis 

The premium is based on the number of employees in each of three categories established by the policy according to the exposure involved. 

Acquisition of Coverage

 All employees are automatically covered. A report is made prior to the inception date of the coverage on the number of employees in each category. This information is requested by the Division of Purchasing, Department of Management Services to determine premium costs. 

Claims Processing

 All claims — or potential claims - are to be reported immediately to EH&S giving known details, audits and/or police reports. Failure to report all details from the first knowledge of a potential claim may be grounds for refusal of coverage by the Bonding Company.