Financial Institution Bond–Standard Form 24 (Excerpt)

The financial institution bond is a package policy designed to provide commercial banks a single contract with protection against a wide variety of hazards. Although it is known as a bond, it is considerably broader than a normal fidelity bond. The bond contains insuring agreements on events involving Fidelity, On Premises, In Transit, Forgery or Alteration (Optional), Securities (Optional), Counterfeit Currency and Fraudulent Mortgages (Optional).

What Is Covered
The financial institution bond specifically lists 24 types of property including money, securities, coins, stamps, precious metals, jewelry, valuable papers and documents of various kinds. Loss of such property is covered whether the insured is the owner of the items or is holding the property in any capacity, and whether or not it is liable for the property. The bond is for the benefit of the insured, not the owner of any property.

Property Not Covered
The financial institution bond specifically excludes loss caused by the paying of forged or altered traveler’s checks except when due to employee dishonesty.

Hazards Covered

Fidelity Insuring Agreement-The financial institution bond covers any loss caused by employee dishonesty, whether committed by an employee alone or in collusion with others.

Premises Insuring Agreement–The bond covers loss or destruction of property caused by robbery, burglary, theft, false pretenses, misplacement, or mysterious unexplainable disappearance.

Furnishings, Fixtures or Equipment–Under this insuring agreement, the financial institution bond also covers loss of or damage to furnishings, fixtures, supplies or equipment within any of the insured’s offices by larceny, burglary, theft, robbery or V&MM.

Unattended Automated Teller Machine Coverage–For an additional premium, this bond may be endorsed to cover loss arising from the use of automated mechanical devices used for disbursing money, cashing checks, making loans under credit cards, or accepting deposits.

Forgery Insuring Agreement–This insuring agreement is optional and covers loss resulting from forgery of negotiable instruments, acceptances, withdrawal orders, receipts for withdrawn property, certificate of deposits and letters of credit.

Bond No. 24 protects the insured against loss caused by transferring, paying or delivering any funds or property to another party. The protection also covers a loss caused by the insured establishing credit or giving value based on written instructions or advice directed to the insured authorizing or acknowledging a transfer, payment, delivery or receipt of funds or property.

Any instructions must contain an assertion that they have been signed or endorsed by a customer of the insured or by a banking institution. Such instructions must either bear a forged signature or must have been altered without the knowledge or consent of the customer or banking institution. Telegraphic, cable or teletype instructions or advice sent by a person other than the customer or banking institution are deemed to also be forgeries. A mechanically reproduced facsimile signature forgery is treated the same as a handwritten signature forgery.