# Title 26.1 — Insurance

## Chapter 26.1-21 — State Bonding Fund

### § 26.1-21-01. Definitions.

As used in this chapter:
1. "Blanket bond" means a bond that covers collectively all public employees and public
officials.
2. "Fund" means the state bonding fund.
3. "International peace garden" means an entity located upon the international boundary
line between the United States and Canada used and maintained as a memorial to
commemorate the long-existing relationship of peace and good will between the
people and the governments of the United States and Canada and to further
international peace among the nations of the world.
4. "Office" means the office of management and budget.
5. "Political subdivision" means a county, township, park district, school district, city, or
any other unit of local government which is created either by statute or by the
Constitution of North Dakota for local government or other public purposes.
6. "Public employee" means an individual employed by a state agency or any political
subdivision, an officer or employee eligible under section 57-15-56, an employee
under section 61-16.1-05, or an officer or employee of an international peace garden.
The term does not include an individual employed by an occupational and professional
board or commission under title 43 or by the state bar association.
7. "Public official" means an elected or appointed officer or deputy of a state agency or a
political subdivision. The term does not include an officer of an occupational and
professional board or commission under title 43 or of the state bar association.
8. "State agency" means a state board, bureau, commission, department, agency,
industry, or institution and the international peace garden.
### § 26.1-21-02. State bonding fund - Office of management and budget - Administrative

services - Continuing appropriation - Report.
1. There is created in the state treasury the state bonding fund for the bonding of public
employees and public officials. The fund consists of all assessments, interest,
investment earnings, and other income collected under this chapter.
2. The office shall manage the fund. The office may contract for administrative services
from the North Dakota insurance reserve fund or another entity to assist with the
management of the fund. A contract for administrative services must have a two-year
term ending on June thirtieth of each odd-numbered year, and the contract may not be
terminated except at the end of the two-year term. If either party does not anticipate
renewing the contract for another two-year term, the party shall give notice of the
intent to not renew by September thirtieth of the even-numbered year during the
two-year term.
3. Moneys in the fund are appropriated to the office on a continuing basis for paying
claims against the fund, contracting for administrative services as provided under
subsection 2, paying costs incurred by the state auditor for investigations under
section 26.1-21-12, and paying reinsurance costs under section 26.1-21-21.
4. If the balance of the fund is less than three million dollars, the office shall collect
assessments from state agencies and political subdivisions. If the balance of the fund
exceeds three million dollars, the office shall waive assessments until the balance of
the fund is less than two million dollars at which time the office shall resume collecting
assessments.
5. If the office determines the interests of the fund are jeopardized by the misconduct or
inefficiency of any public official, the office shall notify the state auditor to conduct an
investigation.
6. The office shall include a summary of the fund in the biennial report submitted in
accordance with section 54-06-04. The summary must include the revenues,
expenditures, and balance of the fund.

### § 26.1-21-03. Commissioner may employ or contract for assistants - Continuing

appropriation.
Repealed by S.L. 2025, ch. 274, § 19.
### § 26.1-21-04. Attorney general is attorney for fund.

The attorney general shall act as legal counsel for the office in any proceeding to which the
office is a party on behalf of the fund.
### § 26.1-21-05. Investment of fund.

Investment of the fund is under the supervision of the state investment board in accordance
with chapter 21-10.
### § 26.1-21-06. Condition of bond created by chapter - Limitation.

Unless otherwise provided, the bond provided under this chapter is a blanket bond. The
blanket bond is a fidelity bond. The blanket bond is conditioned on the public employee or public
official, as principal, rendering a true account of all moneys and property possessed as a public
employee or public official, and delivering the money or the property as required by law. The
provisions of this chapter and of any statute requiring a bond constitute the bond of each public
official and public employee for the purposes of any law of this state requiring the bond and
constitute the entire contract between the fund and a state agency or a political subdivision as
the obligee for the bond.
### § 26.1-21-07. Coverage - Assessments - Minimum.

1. The amount of coverage afforded to each state agency or political subdivision must be
determined by the office based upon the amount of money or property handled and
the opportunity for defalcation. Except as otherwise required by law, the minimum
amount of coverage must equal the amount of money or property actually handled or
ten thousand dollars, whichever is less.
2. The coverage for a state legislative or judicial branch agency may be determined by
the legislative council or supreme court, respectively.
3. Notwithstanding any other provision of law, the office may issue bonds to carry out the
purposes of the fund. In determining the amount of coverage to be offered, the office
may consider the reserves necessary to pay the bonds and for all other necessary
costs or expenses to carry out the purposes of the fund.
4. The office shall determine the amount of the bond assessment. The minimum
assessment is two dollars and fifty cents per public employee per year. Each state
agency and political subdivision shall pay the assessment in advance, and the
assessments collected must be deposited in the fund unless the assessment is waived
in accordance with section 26.1-21-02.
### § 26.1-21-08. Review of coverage by auditor.

Repealed by S.L. 2025, ch. 274, § 19.
### § 26.1-21-09. Premiums - Amount to whom paid - Minimum.

Repealed by S.L. 2025, ch. 274, § 19.
### § 26.1-21-09.1. Bonds of agents appointed to distribute hunting and fishing licenses or

stamps - Assessment - Determination of eligibility.
The annual assessment for a bond of an agent appointed by the director of the game and
fish department to distribute hunting and fishing licenses or stamps pursuant to section
determines that funds received under this section are sufficient to cover potential claims on the
bonds of agents appointed to distribute hunting and fishing licenses or stamps. The office shall
determine the conditions and qualifications of agents bonded under this section. The minimum
amount of coverage under this section is fifteen thousand dollars per agent per year.

### § 26.1-21-10. Automatic insurance of state and political subdivisions.

1. Each state agency and political subdivision shall apply to be bonded in the fund at
least once per biennium or when a change in coverage is requested, whichever occurs
first. Unless an application is denied within sixty days from the date it is received by
the office, the application will be approved and bond coverage in force. If a bond is in
the discretion of the state agency or political subdivision and a bond is not requested,
the state agency or political subdivision is exempt from this section.
2. The application must include:
a. The requested amount of bond coverage based on the amount of money and
property handled, the opportunity for defalcation, and any other condition
imposed by law;
b. An amount equal to twenty-five percent of the money in control of the public
officials or employees for which the bond is requested for the preceding year
based on the total monthly balances; and
c. Any other information requested by the office to determine the amount of money
and property handled and the opportunity for defalcation, including the procedure
used to determine the amount of bond requested, revenues for the last budget
period by type, expenditures for the last budget period by type, the number of
people that handle money, any portion of the last audit, and any financial
procedures.
3. A blanket bond automatically includes coverage for new employees and new public
officials.
### § 26.1-21-10.1. State employee - Defense.

Repealed by S.L. 1997, ch. 286, § 11.
### § 26.1-21-10.2. State employee defense - Expenses withdrawn by attorney general.

Repealed by S.L. 1997, ch. 286, § 11.
### § 26.1-21-11. Claims - Limitation on filing of claims against fund - Register of claims -

Review and payment of claims.
1. Within sixty days after the discovery of any default or wrongful act on the part of any
public employee or public official for which the fund is or may become liable, the state
auditor, county auditor, city auditor, township clerk, or business manager of the school
district; the treasurer of the state or state agency or political subdivision if the
defaulting officer is the auditor or clerk of the state or state agency or political
subdivision; and any other officer having supervision of a defaulting public employee or
public official shall file a claim with the office against the fund.
2. The office may prescribe the forms for claims.
3. The office may administer oaths and examine witnesses in connection with a claim
presented to the office.
4. The office shall maintain a register of all claims filed against the fund, including a brief
description of each claim, the name of the public entity, the amount and character of
the claim, the action taken upon the claim, and the date action was taken.
5. The office shall retain claims and documents relating to claims as provided by law.
6. The office shall review all claims presented to the office. The office shall notify the
state auditor if any public employee or public official defaults or creates a liability
against the fund, and the state auditor may conduct an investigation under section
26.1-21-12.
7. The office shall determine the allowable amount of the claim. The office may delay a
determination of the allowable amount of the claim until receipt of the auditor's report
under section 26.1-21-12. The office shall present all records relating to the claim,
including the allowable amount determined by the office, to the attorney general for
review.

8. The attorney general shall review the validity of the claim and the allowable amount
determined by the office. Upon approval by the attorney general, the office shall pay
the allowable amount to the claimant from the fund.
### § 26.1-21-12. Duty of state auditor - Investigations - Review of coverage.

1. Upon notification from the office of jeopardized fund interests under section
26.1-21-02, the state auditor may investigate the relevant state agency or political
subdivision and may provide a report to the office regarding any findings.
2. The state auditor may evaluate the blanket bond coverage when conducting an audit
of a state agency or political subdivision. The state auditor may recommend changes
in the amount of coverage in the audit report.
3. Costs incurred by the state auditor under subsection 1 must be paid from the fund.
4. The state auditor may contract for an investigation under subsection 1.
### § 26.1-21-13. Audit of claims against state bonding fund - Register of claims.

Repealed by S.L. 2025, ch. 274, § 19.
### § 26.1-21-14. Action against the fund - Failure to act is disallowance - Limitation -

Interest.
1. An action may not be brought against the fund until a claim has been presented to the
office under this chapter and the office has refused to allow the claim.
2. An action brought against the fund for a claim must be commenced within one year
after presenting the claim to the office. The liability of the fund is limited to a breach of
a condition of the bond which occurred within two years before the date of presenting
the claim to the office.
### § 26.1-21-15. Limitation of time for bringing action against the fund - Interest -

Limitation on time for fund liability.
Repealed by S.L. 2025, ch. 274, § 19.
### § 26.1-21-16. Suit by party injured by default of public employee or public official -

Subrogation.
If the payment is paid out of the fund, the fund has a right to recover and is subrogated to
the right of the judgment creditor to recover against the public employee or public official. The
office may act for the fund in all proceedings to enforce the right of subrogation in the same
manner as other parties to civil actions.
### § 26.1-21-17. Allowed liability claims payable from fund - Administrative expenses -

Methods of payment.
Repealed by S.L. 2025, ch. 274, § 19.
### § 26.1-21-18. Action against a public official - Reporting defaulting official to governor.

If the office determines the interests of the fund are jeopardized by the misconduct or
inefficiency of any public official, the office may bring an action against the public official to
require complete disclosure of the business of the state agency or political subdivision of which
the public official is an incumbent. The action must be brought in the name of the office as
plaintiff, and the court in the action may interplead all concerned parties.
### § 26.1-21-19. Cancellation of liability of fund - Cancellation of coverage - Appeal

proceeding.
1. After an investigation, the office may cancel the bond for the acts of any public
employee or public official. The cancellation takes effect thirty days after written notice.
2. The office shall notify the public entity employing the public employee or public official
immediately by certified mail when the bond or coverage under a blanket bond is
canceled.

### § 26.1-21-20. Notice of cancellation - Right to appeal from cancellation - Procedure.

Repealed by S.L. 2025, ch. 274, § 19.
### § 26.1-21-21. Reinsurance.

The office may reinsure any liability in excess of twenty-five thousand dollars for any
one public official, or group of public officials and public employees under a blanket bond, at a
cost not exceeding the assessment under this chapter. The cost of reinsurance must be paid
from the fund.
### § 26.1-21-22. Publication of statement of fund - Biennial report.

Repealed by S.L. 2025, ch. 274, § 19.
### § 26.1-21-23. Additional bond coverage.

1. If a bond or bond coverage for a public employee or public official is canceled under
section 26.1-21-19, the public official or public employee may purchase a bond from
an authorized surety company for a coverage amount determined by the office. The
public official or public employee may not use public funds to pay for the bond.
2. In lieu of the bond provided for in this chapter, a public officer or public employee may
secure a bond from an authorized surety company for a coverage amount determined
by the office. The public official or public employee may not use public funds to pay for
the bond.
3. A state agency or political subdivision may purchase a bond from an authorized surety
company to provide coverage in addition to the bond provided by the fund.
4. Evidence of a bond purchased under this section must be filed with the office.
### § 26.1-21-24. State agency or political subdivision may purchase bond in addition to

fund bond.
Repealed by S.L. 2025, ch. 274, § 19.
