State Farm Insurance License Practice Exam

What is the purpose of a blanket position bond?

1. To cover thefts occurring in a single insured location.

2. To protect against all forms of employee negligence.

3. To cover losses from dishonest acts of one or more employees.

4. To provide insurance for all employees regardless of their actions.

The correct answer is: To cover losses from dishonest acts of one or more employees.

A blanket position bond is specifically designed to cover losses that occur due to dishonest or fraudulent acts committed by one or more employees. This type of bond provides a broader level of coverage by encompassing multiple employees under a single bond, rather than insuring individuals separately. This is particularly advantageous for organizations as it simplifies the process of ensuring coverage against employee dishonesty, making it easier to manage risks associated with potential theft, embezzlement, or other forms of deception executed by employees. The other options do not accurately capture the intent or scope of a blanket position bond. For instance, coverage for thefts occurring in a single insured location would be more aligned with property insurance rather than a bond focused on employee dishonesty. Additionally, while employee negligence is an important concern, that type of liability would generally be addressed through general liability insurance, not a blanket position bond. Lastly, providing insurance for all employees, regardless of their actions, implies a protective measure that does not align with the criteria of covering only the dishonest actions of employees. Thus, option C precisely encapsulates the functionality and purpose of a blanket position bond.