What Is a Name Schedule Bond?

When hiring employees for your business, you take all the necessary precautions to make sure those employees are trustworthy and reliable. Unfortunately, it’s not always clear what will happen once you bring someone into your business. Sometimes, you may have your suspicions about certain employees. In these cases, it’s important to protect the business just in case of theft.

A named scheduled bond is a type of fidelity bond that protects a business against theft. The unique aspect of this bond is that you can name specific employees to be covered.

What is the Difference Between Insurance and a Bond?

There are insurance policies available that cover employees, as well, such as crime insurance. Crime insurance and a fidelity bond are similar, but often have a few differences. Crime insurance is usually offered as an endorsement on a commercial package policy or business owners policy while a fidelity bond must be purchased separately. The amount of coverage offered may also vary between the two.

The main difference between a crime insurance policy and a name schedule fidelity bond is who is covered. A crime insurance policy offers blanket coverage for employees. A name schedule fidelity bond covers only individuals explicitly named on the bond. If one of these individuals commits theft or fraud, the bond will provide compensation to the business for the losses.

Deciding what kind of policy you need should depend on your business’ specific needs. Be sure to shop around and ask your insurance agent about the best type of policy for your business.

Why Do You Need a Name Schedule Bond?

There are more reasons to purchase a name schedule fidelity bond than simply not trusting certain employees, although this is a valid concern as well.

Many business owners will place individuals on a name schedule bond who are in positions of power whose theft would cause great damages to the business. Employees that have access to the company’s assets should be named under a name schedule bond. A retail worker generally won’t have access to large amounts of cash, for example, but a director of a board or an accountant will have access to business and client assets that could cause heavy damage if they chose to steal or commit fraud. The schedule in a name schedule bond refers to the division of coverage for each employee. A different amount can be dictated for each employee.

How Does a Name Schedule Bond Work?

A business owner can purchase a name schedule bond from a surety or certain insurance providers. Once the business owner agrees on a bond policy with the surety, they can name the different employees and spread out coverage between the named employees.

How Much Does a Name Schedule Bond Cost?

The cost of a name schedule bond depends on the size of the bond, the industry, the number of individuals covered and other related factors. A typical fidelity bond costs around $1,054 a year (about $87.83 a month) for $1 million in coverage. Coverage is generally available by millions, though some sureties offer fidelity bonds for less coverage. Businesses often purchase bonds as well as insurance bundles such as business owners policies (BOPs) and commercial package policies (CPPs).

Before purchasing a bond, be sure to consider the monetary repercussions of theft or fraud in each position of your business. Also consider the cost effectiveness of an insurance policy versus a name schedule bond. While one may be cheaper than the other, you don’t want your business left without coverage in the unfortunate event of employee dishonesty.