Under what circumstances may a bond be excluded in an insurance policy?

A bond may be excluded in an insurance policy primarily due to its involvement in fraudulent activities. This is because insurance policies often have clauses that explicitly deny coverage for any loss arising from illegal acts, including fraud. When an activity or claim is linked to deceit, misrepresentation, or any unlawful conduct, insurers will typically consider the bond null and void as they seek to avoid covering risks associated with illegal or dishonest actions.

In contrast, a bond's exclusion based on being under a specific amount is less likely, as policies usually specify minimum thresholds for coverage rather than outright exclusions for lower amounts. Changes in parties involved may not inherently trigger an exclusion unless the policy specifically stipulates that only certain parties are covered. Finally, legal purposes do not warrant exclusion; rather, they typically justify the bonding arrangement and indicate that the bond is in compliance with relevant laws and regulations. Thus, it is clear that the presence of fraud is a critical factor that directly impacts the validity and enforceability of the bond under an insurance policy.