Servicing Contractors Rider

The Servicing Contractors Rider extends the definition of “Employee” under the Fidelity coverage (Insuring Agreement A) to include servicing contractors. A servicing contractor is a person, partnership, or corporation (other than a financial institution employee) authorized to:

  1. Collect and record real estate mortgage or home improvement loan payments;
  2. Establish tax and insurance escrow accounts;
  3. Manage real property owned, supervised, or controlled by the financial institution; or
  4. Perform other acts related to the above activities.

Sample Rider
Coverage Summaries of Bond Riders

Claims Examples
  • A bank hires a servicing contractor to collect and record real estate mortgage payments. The contractor collects payments for a period of time, but fails to forward the funds collected to the bank. The bank is unable to locate the contractor and sustains a loss.

Features
  • Coverage is provided for losses resulting from dishonest or fraudulent acts committed with intent to cause a loss to the financial institution and to gain a financial benefit for the servicing contractor or another.
  • Coverage includes loss due to a contractor’s failure to forward funds collected on behalf of the financial institution, provided that the contractor is legally obligated to do so.
  • This rider does not provide coverage for losses resulting from a contractor’s failing to collect funds; a contractor’s insolvency or bankruptcy; or loans to servicing contractors.

Notwithstanding any language to the contrary, nothing contained herein constitutes nor is intended to constitute an offer, inducement, promise, or contract of any kind. All coverage descriptions and claims examples are provided for informational and educational purposes only and are not a representation as to coverage for any particular claim and are not represented to be error free. Coverage for any claim is determined upon the specific facts of the claim, the terms and conditions of the policy and applicable law. For details on the coverage provided by your specific contract of insurance, please refer to your policy. Coverage is subject to underwriting guidelines and may not be available in all states. Limits may be capped for underwriting reasons. Any links to any sites which are not originated by ABA Insurance Services Inc. (ABAIS) are provided only as a courtesy and are not intended to nor do they constitute an endorsement by ABAIS of the linked materials.