Texas Insurance Code 912.306 – Required Bonds
(a) A county mutual insurance company shall obtain a bond for:
(1) the officer responsible for handling the funds of the company’s members; and
(2) all other office employees who may have access to the company’s funds.
(b) The bonds required under this section must:
(1) be with a surety authorized by the department to engage in business in this state;
(2) be made payable to the department for the use and benefit of the company’s members; and
(3) obligate the principal and surety to pay pecuniary losses that the company sustains through an act of fraud, dishonesty, forgery, theft, embezzlement, wrongful abstraction, or wilful misapplication, regardless of whether the act is committed by the officer or employee directly and alone, or in cooperation with another person.
Terms Used In Texas Insurance Code 912.306
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Embezzlement: In most states, embezzlement is defined as theft/larceny of assets (money or property) by a person in a position of trust or responsibility over those assets. Embezzlement typically occurs in the employment and corporate settings. Source: OCC
- Forgery: The fraudulent signing or alteration of another's name to an instrument such as a deed, mortgage, or check. The intent of the forgery is to deceive or defraud. Source: OCC
- Fraud: Intentional deception resulting in injury to another.
- Person: includes corporation, organization, government or governmental subdivision or agency, business trust, estate, trust, partnership, association, and any other legal entity. See Texas Government Code 311.005
(c) A bond under this section must:
(1) be in an amount that is at least the greater of $1,000 or the amount of cash assets on hand, but not more than $20,000, if the bond covers the officer; or
(2) be in an amount established by the department that is at least $1,000 but not more than $5,000, if the bond covers office employees.
(d) One or more persons may recover on a bond under this section until the bond is exhausted.