Public Official Blanket Bonds vs. Individual Bonds: Types and Coverage

Key takeaways:

• A public official blanket bond covers multiple officials of a public entity under one bond. An individual public official bond covers one named official. 
• Newly elected or appointed officials in covered positions are covered automatically under a blanket bond. 
• Blanket bonds can't replace required individual bonds, including those for treasurers and tax collectors. 
• Merchants Bonding offers four public official blanket bonds: blanket honesty, blanket position honesty, and both with faithful performance. Quote and issue them through the Hub.

Election Day is right around the corner. Once results are in, newly elected and appointed officials may need to be bonded before they take office. That's a lot of new business, and no two public entities have the same bonding needs.

Merchants Bonding writes both public official blanket bonds and individual public official bonds. Here's how the two compare. 

What is a public official bond?

A public official bond guarantees that an elected or appointed official will handle public money honestly and carry out the duties of the office. If the official commits fraud, steals funds, or neglects those duties, the bond protects the public entity and the constituents it serves. 

Who needs a public official bond?

Treasurers, tax collectors, clerks, assessors, judges, and board members at the city, county, school district, and state levels are commonly required to be bonded. Whatever the position, the bond is there to protect the constituents that official serves. 

What is a public official blanket bond?

A public official blanket bond covers multiple officials or employees of a public entity under a single bond. Instead of issuing a separate bond for each person, the entity has one bond, renewal date, and set of paperwork. 

That's especially helpful for entities where positions turn over frequently. When a new board member is elected or a deputy clerk is hired, the entity doesn't have to start a new bond from scratch. 

The public entity remains the obligee, and constituents are protected. 

Individual vs. blanket public official bonds

State law, local ordinance, or the public entity itself determines which bond each position needs. 

	Individual bond	Blanket bond
Who's covered	Push Q4 collections and close out finished jobs.	Counts at full value toward working capital.
Number of bonds	Collect anything nearing 90 days.	Keeps the asset from being discounted.
Renewal dates	Finance equipment long term. Don't draw the line for long-term assets, and pay it down with Q4 inflows.	Cash stays in working capital. Paying down the line doesn't change working capital, but it signals discipline.
When someone new takes office	Collect loans the company made to owners, affiliates, or outside ventures.	Left on the books, they're discounted from working capital and net worth and raise questions about where cash is going.
Bond limit	Move stocks, personal purchases, and outside ventures off the books.	Changes how an underwriter reads the account's appetite for risk.

 

Blanket bonds don't replace a required individual statutory bond or cover treasurers and tax collectors.

Types of public official blanket bonds

Merchants Bonding offers four public official blanket bonds, built from two coverage options and two limit structures. 

Bond	What it covers	How the limit applies
Blanket honesty bond	Dishonest acts, such as theft, fraud, or embezzlement	One limit shared by all covered officials and employees
Blanket honesty bond with faithful performance	Dishonest acts, plus negligence, poor judgment, and failure to follow duties	One limit shared by all covered officials and employees
Blanket position honesty bond	Dishonest acts, such as theft, fraud, or embezzlement	A separate limit for each covered position
Blanket position honesty bond with faithful performance	Dishonest acts, plus negligence, poor judgment, mismanagement, and failure to follow duties	A separate limit for each covered position

 

Blanket bond vs. blanket position bond

The difference is how the penalty limit applies. 

• Blanket bond: one shared penalty limit for the whole covered group 
• Blanket position bond: the penalty limit applies to each covered officer or employee

Say a city carries a $50,000 bond, and two employees work together to take $80,000. Under a blanket bond, $50,000 is the most the bond will pay for that loss. Under a blanket position bond, the $50,000 limit applies to each employee involved, so the bond could respond up to $100,000, enough to cover the full $80,000. 

That's also why underwriting looks at the two differently. Per-person limits increase the total potential exposure on the bond.

Honesty vs. faithful performance coverage

Honesty coverage responds when a covered official acts dishonestly: stealing funds, falsifying records, or committing fraud. It covers intentional wrongdoing. 

Faithful performance coverage goes further. It also responds to losses caused without dishonest intent, including: 

• Negligence
• Poor judgment 
• Mismanagement 
• Failure to follow the duties of the office 

Many state statutes and entities require public officials to be bonded for faithful performance.

How to get a public official blanket bond

Start the conversation with your public entity clients before November 3. Ask three questions:

1. Which positions does state law or local ordinance require to be bonded, and at what amounts?
2. Does the entity require individual bonds for any positions beyond the treasurer and tax collector?
3. Do the requirements call for faithful performance coverage, or honesty only? 

With these answers, you'll know whether a blanket bond fits and which of the four types to quote. Then quote and issue through the Hub. 

GET STARTED WITH THE HUB

 

Work for a public entity and need a bond? Use our Find an Agent tool to connect with a Merchants Bonding-appointed agent. 

*Merchants Bonding public official blanket bonds are available in all states except California, New York, and Washington. 

Public official blanket bond FAQs

Can a blanket bond replace individual bonds required by state law?

No. If a statute or the public entity requires an individual bond for a position, a blanket bond won't satisfy it. Treasurers and tax collectors always need an individual bond.

Are newly elected officials automatically covered under a blanket bond?

In most cases, yes. A blanket bond covers the officials and employees of the named obligee, so when a newly elected official takes over a covered position, they're covered without a new bond being issued. If the entity adds positions or the number of covered officials changes significantly, notify your surety agent so the bond can be updated at renewal.

How much does a public official blanket bond cost?

Premiums vary by state, bond type, limit, and the number of positions covered. Usually 0.5-3% of the bond amount annually.

Who is the obligee on a public official blanket bond?

The obligee is typically the public entity, such as the city, county, or school district, that requires the officials to be bonded.