When a bank employee commits a crime, it impacts multiple parties, from the bank itself to the institution’s client. There are specific insurance plans that cover all parties. One policy that largely assists the employer is known as financial institution bond coverage. Bank personnel generally use this type of insurance against many employee-related crimes and risk factors.
What Is a Financial Institution Bond?
Despite the name, a financial institution bond is a type of insurance that aims to protect these institutions from any crime committed by its employees. It specifically covers major financial and property losses. This plan comes in several forms and shapes depending on the client and purpose, such as fidelity bonds that are required by law and are obtained by fund managers, or a banker’s blanket bond that specifically services banks.
What Risks Does It Cover?
While individual bonds may differ on the coverage, they generally cover some common employee crimes or risk scenarios. According to Financial Guaranty Insurance Brokers, Inc., some of the risks included in most bond plans include the following:
Fraud to vendor
Cybercrimes (fraud, theft, etc.)
Insurance may include broader protection or coverage against specific acts.
Financial institution bonds keep these organizations and their assets safe from irresponsible actions committed by employees. Despite being mandatory by law, institutions find this insurance coverage plans reliable against major problems.