The Financial Institution Bond provides fidelity coverage as required by regulators for financial institutions. These coverages are provided through an enhanced version of the Surety Association Form 24, Revised to January 2004. Four Insuring Agreements comprise “basic” coverage:
Insuring Agreement A - Fidelity
As employee dishonesty represents the greatest threat to a financial institution, Agreement A is the most important part of a financial institution’s Bond coverage. Agreement A covers dishonest or fraudulent acts committed by employees acting alone or in collusion with others. Note that the employee must have intended to cause a loss to the financial institution and to obtain an improper financial benefit for the employee or another. If some or all of the loss results from loans, the employee must also have been in collusion with a party to the transaction and received an improper financial benefit.
Insuring Agreement B - On Premises
Agreement B covers losses resulting from burglary, robbery, misplacement, or mysterious unexplainable disappearance of property (except while in transit). Losses resulting from theft, false pretenses, and larceny are also covered if committed by a person while on the premises of the bank. Damage to the insured’s furniture or fixtures resulting from the above-listed acts is also covered under this Insuring Agreement (unless caused by fire).
Insuring Agreement C - In Transit
Agreement C covers losses of certain defined property, including money, while in transit. Losses must be a direct result of robbery, larceny, theft, misplacement, mysterious unexplainable disappearance, damage or destruction to the property. If the property is being carried by a transportation company but not in an armored vehicle, only records, certificated securities in registered form and not endorsed (or with restrictive endorsements), and negotiable instruments not payable to the bearer and not endorsed (or with restrictive endorsements), are covered.
Insuring Agreement F - Counterfeit Money
Agreement F, as expanded by rider, covers losses resulting from the financial institution having received in good faith counterfeit currency of any country.