Financial Institution Bonds Explained
Financial institution bonds are a type of fidelity bonds. Their purpose is to protect your finance-related company against different illegal acts your employees may engage in on the job. They are sometimes referred to as bankers blanket bonds, and they work as insurance for your business, so they are first-party products.
Banks and other financial institutions typically obtain these bonds in order to protect themselves in cases of employee theft, forgery, and other types of dishonesty. Financial institution bonds are similar in their functioning to employee dishonesty bonds.
Questions about Fidelity Bonds
When do I need a financial institution bond?
Many financial organizations such as banks, depository institutions, credit unions, mortgage institutions, and investment funds and managers use financial institution bonds to protect their monies and properties against employee dishonesty. These bonds are not obligatory but are a preferred choice.
Financial institution bonds can provide compensation for your company in cases of your employees committing forgery, fraud, kidnap and ransom, computer and securities fraud, and counterfeit, among others. They, however, do not provide insurance against information theft and credit insurance.
There are four main types of financial institution bonds, separated by form number and targeted at different financial entities:
Form 14 - for investment bankers and companies, stock exchange services, stock brokers, commodity brokers, and securities investor protection firms, mutual funds, and foundation and endowment funds
Form 15 - finance companies, small loan companies, mortgage companies, mortgage real estate investment trusts (REITs), and finance firms
Form 24 - national commercial banks, including savings and loans providers, U.S. subsidiaries of foreign banks, trust companies, loan and building associations, and title insurance companies
Form 25 - insurance and reinsurance firms
What is the bond price?
As for other fidelity bonds, the cost of your financial institution bond will depend on the exact type of your company, the number of employees to be included in the coverage, and the dollar amount of coverage that you want to obtain. For larger amounts, you may need to showcase your personal finances, such as your credit score.
Can I get bonded with bad credit?
Typically, the credit score of the business owner is not a factor in obtaining financial institution bonds. This means that in most cases, you would not find it difficult to get bonded with bad credit. However, for larger coverage, it may be a factor.
How does the bonding process work?
In order to obtain your financial institution bond, you have to do the following:
- Download the application form
- Fill it out and send it to [email protected] or fax it to (267)-362-4817.
Lance Surety Bonds' experts are here to help you with any questions you may have about financial institution bonds. You can call us at (877) 514-5146.