Agents Coverage
Amends the policy definition of employee to include persons, partnerships, or corporations (such as conveyancers, collectors of rents or savings from persons making systematic deposits with the insured; but excluding servicing contractors, managers of real property, data processing organizations and independent software contractors), duly elected or appointed by the bank to serve as its agent.
Audit and Claims Expense
Covers reasonable expenses incurred and paid by the bank for audits or examinations required by state or federal regulators when the audits are conducted either by such authorities or by independent accountants due to the discovery of any valid and collectible loss under employee dishonest / fidelity coverage.
Automated Teller Machines
Loss of property located within an ATM machine including damage to the machine itself caused by burglary, robbery or attempted burglary or robbery. Some policies limit coverage to ATMs that are a part of a bank building.
Check Kiting Fraud
Covers loss resulting directly from checks, which are not finally paid because of a check kiting fraud established against the bank.
Computer Systems Fraud
Covers loss from a fraudulent entry of electronic data or computer program within a covered computer system.
Data Processing Service Operations
Covers loss sustained by a customer of the bank resulting directly from a fraudulent entry of electronic data or computer program into, or change of electronic data or program within a computer system covered by the policy, or entry or change of electronic data during electronic transmission or physical transit from the bank to its client and for which loss the insured is legally liable to the client as a provider of data processing services.
Debit Card Coverage
Provides coverage for loss resulting directly from the fraudulent use of a debit card to obtain cash or pay for products or services by gaining access to an electronic payment device provided that such device, as part of the transaction, electronically verifies the customer’s available funds in the customer’s depository account at the insured.
Destruction of Data or Programs by Hacker
Covers loss resulting directly from the malicious destruction of, or damage to computer programs owned by the bank, or for which the bank is legally liable, while stored within a computer system covered under the terms of the Computer Systems Fraud coverage section. Protection is usually included for the cost of duplicating damaged or destroyed data or computer programs from backup sources.
If the computer programs cannot be duplicated from a backup, the insurance company will pay the additional costs to restore damaged or destroyed data.
Destruction of Data or Programs by Virus
Covers loss from the malicious destruction of, or damage to, electronic or computer programs owned by the bank, or for which the bank is legally liable, while stored within a computer system. Protection is usually included for the cost of duplicating damaged or destroyed data or computer programs from backup sources or the additional costs of restoring the damaged data.
Forgery / Unauthorized Signature
Provides protection against a loss caused by an unauthorized signature or the alteration of a negotiable instrument, including counterfeit checks, acceptance, withdrawal order, certificate of deposit, letter of credit, or receipt of the withdrawal of property. This coverage does not usually apply to an evidence of debt.
Fraudulent Mortgages
Covers loss through the bank having, in good faith, acted upon any real property mortgages or similar instruments, which prove to be defective by reason of the signature on such instruments having been obtained by trick or false pretenses.
Indemnity for Injury or Death of Directors or Employees
Covers payments made to directors or employees who were injured or whose death was caused by any person who is committing or attempting to commit any act of larceny, theft, robbery, or burglary.
Kidnap-Ransom-Extortion
Covers the loss of money surrendered and expenses incurred as a result of:
1) The actual or alleged kidnapping of an insured person;
2) A threat to kill, injure, or kidnap an insured person;
3) A threat to cause physical damage to and/or contaminate or pollute the insured’s property;
4) A threat to disseminate, divulge or utilize any confidential, private or secret information unique to the insured’s business which is protected by physical or electronic controls;
5) A threat to alter, adulterate, or destroy any of the insured’s computer programs by introducing into the insured’s computer systems, instructions or data which are not authorized by the insured.
Safe Depository
Provides coverage for amounts the bank is legally liable to pay because of the loss, damage, or destruction of customer’s property from a safe depository. Some policies allow for the exclusion of money at a reduced premium.
Coverage can be written in two ways:
(1) Liability of Depository – covers loss which the insured shall become legally obligated to pay by reason of liability for loss of customers’ property.
(2) Loss of Customers’ Property – covers loss of customers’ property by burglary or robbery, or attempt thereat, or for damage to or destruction of customers’ property regardless of the liability of the bank.
Some insurance companies offer safe depository coverage as a separate policy.
Securities
Covers losses resulting from extending credit on the faith of stock certificates, documents of title, deeds, mortgages, certificates of title, corporate or personal guarantees, evidences of debt and security agreements, which are forged, altered, counterfeited, lost, or stolen. The bank must have relied in good faith upon an original instrument. The document must have been in the physical possession of the bank, its correspondent, or representative.
Servicing Contractors
Extends coverage for loss resulting from dishonest acts of a person or organization that collects and records payments on real estate mortgage or home improvement loans, or manager of real property under the control of the insured.
Stop Payment or Wrongful Dishonor
Provides coverage for loss that the insured is legally liable to pay due to the insured’s:
1) Failure to comply with a customer’s request to stop payment on a negotiable instrument
2) Refusing to pay a negotiable instrument; and
3) failure to give proper notice of dishonor.
Telefacsimile Transfer Fraud
Covers loss resulting directly from the bank having, in good faith, transferred or delivered funds, certificated securities, or uncertificated securities through a computer system covered under the terms of the Computer Systems Fraud coverage section, in reliance upon a fraudulent instruction received through a telefacsimile device.
Trading Loss
The employee dishonesty coverage in many bonds excludes losses involving trading (any purchase, exchange or sale transaction). Trading loss coverage buys back the exclusion. Therefore, coverage is provided for a loss caused by an employee’s fraudulent trades.
Transit Cash Letter Rider
Cash letters are usually covered within the “In Transit” coverage. Some insurers offer coverage that extends the protection by eliminating the deductible, providing reimbursement for reproduction costs, and extending coverage beyond the final destination of the cash letter to the financial institution upon which an item was drawn. Insurers usually require that the front and back of each item placed in the cash letter be photocopied.
Voice Initiated Transfer Fraud
This coverage is only available only in conjunction with Computer Systems Fraud coverage. Provides the bank with protection for loss resulting directly from the insured having, in good faith, transferred funds from a customer’s account through a computer system covered under the terms of the Computer Systems Fraud section, in reliance upon a fraudulent voice instruction transmitted by telephone.
Voice Computer System Fraud
Covers loss resulting directly from toll call charges, which were incurred due to the fraudulent use or fraudulent manipulation of an account code or systems password required to obtain access to the insured’s voice computer system.
