Financial Bonds

Financial Institution Bonds

Overview

Used to insure banks and other financial institutions against employee dishonesty, burglary, robbery, forgery, and similar crime exposures. Previously called a “bankers blanket bond.” Coverage may be provided on the standard forms promulgated by the Surety Association of America (SAA) or on a special form drafted by the insurer.

Note: The terms and provisions of any bond, policy, form, rider or endorsement govern any questions that arise in connection with their use. Always refer to the appropriate bond or policy for complete details.

Each of the six Financial Institution Bonds is designed for a specific type of business or use:

FORM NUMBER	ELIGIBILITY
Standard Form No. 14	Stockbrokers and investment bankers
Standard Form No. 15	Finance companies
Standard Form No. 23	Credit unions
Standard Form No. 24	Commercial Banks, Savings and Loan Associations and Savings Banks
Standard Form No. 25	Insurance Companies
Standard Form No. 28	Excess bond over Insuring Agreement (A) only

Application

Financial Institution Bond–Standard Form No. 24 is usually issued only after the underwriter receives a completed application and thoroughly reviews and investigates it. Every application should include details on the extent of supervision those responsible for the safe operation of the financial institution exercise.

The following is information should be included in any financial bond application:

The locations of the principal office and all branch offices
The total amount of deposits and the number of regular accounts, both active and inactive
The volume of loans secured by various types of paper
Loss experience for the past five years and disclosure of whether any insurance company has declined or cancelled coverage
Disclosure of whether any other security or indemnity is or will be carried against the types of losses the bond covers
Copies of the applicant bank or financial institution’s latest financial statement
Information on the identity of officers authorized to enter vaults and safes that contain cash and securities as well as to withdraw securities deposited for safekeeping with Federal Reserve and depository banks

Detailed information about all safes and vaults
Protective measures in place and how messengers are used
The average amount of cash kept on hand and that tellers have
Information and details of any case where the collateral used to secure collateralized loans is removed from vaults to tellers’ cages during business hours
Employee data including name, date of hire, position, and place of employment
Director and officer data including name, date of appointment, and position
Electronic data processing information including names of entities that provide service along with a copy of the contract that outlines services and liability

Declarations

Every financial institution bond has the declarations built into it as part of the form. It is located at the beginning of the bond and provides information on the parties to the bond, in addition to details that make the bond unique to the specific insured.

STANDARD FORM NO. 24 DECLARATIONS

Bonding company underwriters assign a unique bond number at the beginning of the bond period. It is for a specific bond and is changed each time it renews.

The underwriter’s name and address is listed on the bond. It is done this way because the listed underwriter is the company when that term is used in the body of the bond.

STANDARD FORM NO. 14 DECLARATIONS

The declarations in Standard Form No. 14 is identical to the declarations in Standard Form No. 24 with two exceptions. Standard Form No. 14 lists Partners Coverage in Item 4 following Insuring Agreements D and E and Insuring Agreement G is not part of Standard Form No. 14.

STANDARD FORM NO. 15 DECLARATIONS

The declarations in Standard Form No. 15 is identical to the declarations in Standard Form No. 24 except that Insuring Agreement G is not part of Standard Form No. 15.

STANDARD FORM NO. 23 DECLARATIONS

Standard Form No. 23 was last updated in 1950 and does not have a declarations. As a result, its opening wording begins with the names of the two parties and the aggregate limit. It ends with Section 11, where riders are attached and where there is a list of prior bonds that terminate when the current bond is accepted.

STANDARD FORM NO. 25 DECLARATIONS

The declarations in Standard Form No. 25 has a different Item 6. It states that all of the insured’s offices in the United States and Canada are covered in addition to other offices listed. In addition, Insuring Agreement G is not part of Standard Form No. 25.

STANDARD FORM NO. 28 DECLARATIONS

This form is identical to Standard Form No. 24 except that it does not refer to Optional Coverage.

Riders

This list identifies forms and endorsements available to attach to the Surety and Fidelity Association of America (SFAA) Financial Institution Bonds. It is arranged by form number and title and includes a brief explanation of the use of each form. It does not address state-specific forms, endorsements, changes or amendments.

Forms and riders are grouped in categories according to their purpose as follows:

Bond Forms
Bond Riders

BOND FORMS

Financial Institution Bond–Standard Form No 14

This bond is used to cover Stockbrokers and Dealers.

Financial Institution Bond–Standard Form No. 15

This bond is used to cover Mortgage Bankers and Finance Companies.

Credit Union Blanket Bond–Standard Form No. 23

This bond is used to cover Credit Unions.

Financial Institution Bond–Standard Form No. 24

This bond is used to cover all types of Commercial Banks, Savings Banks, and Savings and Loan Associations.

Financial Institution Bond–Standard Form No. 25

This bond is used to cover Insurance Companies.

Excess Bank Employee Dishonesty Bond–Standard Form No. 28

This bond provides excess employee dishonesty coverage for Commercial Banks.

BOND RIDERS

Bond Riders PDF

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