Financial Institution Bond Coverage
The attached article is interesting reading for a number of reasons. On the surface, it is interesting from the standpoint of learning more about “forensic investigation” and especially how that translates to bank fraud. But, it does have a more subtle lesson, and one that should be considered when structuring your coverage for the bank’s Financial Institution Bond!
Everybody knows that the main thrust of the Bond is to protect from Employee Dishonesty. And as the article illustrates, those exposures are still large in terms of frequency and severity. But what if the bank had been unable to prove that the employee actually stole the money? Would the Bond cover this loss?
Bankers often think of the Computer Systems portion of the Bond as way by which the bank gets coverage from hackers. But, the key description of this portion of the Bond is “loss from fraudulent entry … into/within any Computer System operated by the insured”. Of course, each policy is different and is subject to terms, exclusions and such. But, this is why care and focus is given to each portion of the Bond!
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