A faithful performance of duty bond covers any loss the organization or a member of the public suffers because the employee failed to faithfully perform his or her duty. In other words, the faithful performance of duty bond will protect the organization against losses caused either by dishonesty or by other types of employee malfeasance besides dishonesty. Faithful performance of duty bonds are designed to cover those in positions of trust, frequently designated as such in the Code of Virginia.
A fidelity bond, or crime insurance, covers the risk of employee dishonesty, that is, the risk that an employee will steal money.
A faithful performance of duty bond covers the same dishonesty as a fidelity bond. In addition, it covers additional situations, such as a loss of Commonwealth funds resulting from an employee's malfeasance, willful neglect of duty, bad faith or negligence.
Bonds do not protect the employee. Bonds protect the agency and the public from the loss of commonwealth funds. Individuals cannot collect under these bonds. If a bond claim is paid as a result of an employee's dishonesty or malfeasance, the funds are paid to the agency.
No, not if he is merely accused of intentional wrongdoing. However, an employee found guilty by a court of law is on his own.
Technically, yes, but there would be little reason to do so. Most tort liability claims are already covered under the state's liability risk management plan, which is designed specifically for such losses. Also, the bond administrator, whether insured or self-insured, is entitled to recover from the employee anything it pays to the agency on the employee's behalf.
Filing a faithful performance of duty bond claim can have major consequences. It is not something to be taken lightly. If the agency is considering filing a claim under a faithful performance of duty bond to recover a loss suffered because of the employee's mistake or carelessness, the agency is saying that the employee failed to faithfully perform his or her duties and the employee should therefore repay the agency for the loss he or she caused. The bond pays only if the employee has a duty to do so, and if the employee has a duty to pay, the surety making the payment is entitled to attempt to recover from the employee anything it pays on the organization's behalf.
If you were to structure bond coverage this way, you would, in effect, be betting that you know who is going to steal the money and how much will be stolen. From the standpoint of protecting the Commonwealth's assets, it is better to cover all possibilities, however remote. In other words, it is best to assure that, if a loss occurs, the loss is covered.