Bonds guaranteeing the deposit of public funds.

The bankers blanket bond insures against a variety of dishonest and criminal acts to which banks and other financial institutions are exposed. The most common form is the Surety Association of America’s Form 24 that is divided into six parts.Clause (A)- Fidelity
Dishonest or fraudulent acts by officers and employees of the bank are covered under clause A. This includes attorneys retained by the bank and outside information technology and data processing personnel contracted by the bank. An endorsement may be attached that designates such personnel, including the firms they work for, as “employees” under this section. Outside directors are normally not covered under this section and there is a limit on the coverage for losses due to fraudulent loan activity.

Clause (B)- On Premises

This clause covers robbery, burglary, theft (including theft by false pretenses), larceny, mysterious disappearance, and damage and destruction to money and securities while on the bank’s premises.

Clause (C)— In Transit

The same coverage applies as in Clause (B) except the coverage is extended to property while in transit. Coverage is applicable, however, only while in the custody of a person acting as messenger for the bank. If an outside transportation company is employed by the bank, cash is usually not covered unless the firm uses an armored vehicle.

Clause (D)— Forgery or Alteration

This is an optional coverage for specified negotiable instruments (e.g., checks, drafts, etc.) that have been forged or altered and that the bank has accepted either over the counter or through clearings. Items received through electronic funds transfer, however, are commonly not covered under this clause.

Clause (E)- Securities

Another optional coverage, the purpose here is to protect the bank against relying on fraudulent securities, either for its own account or for the account of others. For example, coverage would apply if the bank made a loan on a fraudulent letter of credit or a forged title to property.

Clause (F)— Counterfeit Currency

The purpose of this clause is to cover the bank against the good faith acceptance of counterfeit U.S. or Canadian currency. Foreign currency is included if the bank has a branch office in the host country. Other coverage that may be attached to the banker’s blanket bond includes:

Combination Safe Depository

This covers damage or destruction to customers’ property held in safe deposit boxes. The bank may purchase coverage only for those losses for which it is legally liable or it may purchase coverage for all losses, whether liable or not.

Registered Mail and Express Insurance

This covers valuable items such as money or securities sent by registered mail or express. The items are covered from the time they leave the bank’s premises until they are delivered to the intended addressee.

Valuable Papers and Destruction of Records Policy

This covers the cost of reproducing records or papers damaged or destroyed by the perils specified in the policy. The coverage includes the cost of research to reconstruct the records.

Insurance that protects a bank against fraudulent acts perpetrated by employees, as well as theft or burglary perpetrated by non-employees.

Assignments of policies may also be void or against the trustee in bankruptcy by Sec. 42 of the Bankruptcy Act. But once the assignor has made a settlement of the Policy caught by that section, subsequent payments of premium up to the date of his bankruptcy will not constitute fresh settlement within it.

Bonds that provide a guarantee to the beneficiaries of the bankruptcy action that the bonded trustees, appointed in a bankruptcy proceeding, will perform their duties and handle the affairs according to the rulings of the court.