Crime/Financial Fidelity

ForeFront Security Bond

Even with excellent controls, procedures and security in place, community banks can be surprisingly vulnerable to dishonest employees, fraud artists, computer hackers and violence-prone individuals. Many of these threats are not addressed by a standard financial institution bond, leaving you dangerously exposed to losses. Chubb’s ForeFront Security Bond is designed to help.

Coverage Highlights

Benefits

  • Specifically designed to help protect commercial banks, savings and loans, savings banks, and similar depository or lending institutions whose primary purpose is to serve their local communities, with assets typically less than $1 billion
  • Includes coverage for:
    • Financial institution bond exposures
    • Electronic and computer crime
    • Safe depository liability
    • Workplace violence expense
    • Kidnap/ransom and extortion
  • Provides added protection when strong controls still fall short
  • Helps protect community banks against losses and expenses from:
    • Employee dishonesty
    • Trade or loan fraud
    • Computer system fraud
    • On-premises theft, including robbery and burglary
    • In-transit theft
    • Forgery or alteration
    • Extended forgery
    • Automated devices
    • Counterfeit money
    • Defective signatures
    • Servicing contractors fraud
    • Voice-initiated funds transfer fraud
    • Extended electronic computer crime
    • Telefacsimile fraud
    • Cash letter fraud
    • Unauthorized signatures
    • Stop payment fraud
    • Check-kiting fraud
    • Safe depository liability
    • Telephone toll call fraud
    • Kidnap/ransom and extortion
    • Workplace violence
  • Pays reasonable expenses incurred for investigations, audits and qualifying rewards

Coverage

  • One simplified application
  • Insurance provided on an “each and every” single-loss basis
  • Noncancelable by Chubb except for non-payment of premium
  • Automatic protection for newly acquired subsidiaries.
  • Automatic protection for employee benefit plans that qulify under ERISA
  • Annual policy with the option to purchase a multiyear program
  • Broad definition of employee dishonesty, including elimination of manifest intent requirement
  • Elimination of $2,500 financial benefit threshold in lending losses
  • Elimination of outside collusion requirement in lending losses
  • Broad definition of tangible property for on-premises insuring clause
  • Robbery extends to loss of property while in customer’s possession on premises
  • Central handling of securities is included
  • Destruction of checks in transit to data-processing centers is included
  • Fraudulent instructions forgery includes signatures of employees
  • Uncertificated securities is included
  • Automated devices insuring clause includes burglary and damage or destruction of property
  • Counterfeit money insuring clause applies to money of any country
  • $10,000 robbery reward
  • No exclusion for unauthorized access to electronic systems by customers
  • $10,000 death benefit for directors or employees killed during robbery on premises

Claims Advantages

Although it’s important to have the right insurance protection, it is just as important to know that your insurance company has the expertise to respond to complex claims. If you have a loss, Chubb’s financial institution claim specialists are ready to respond to your needs with the expertise to manage any unforeseen issues that can arise on a claim. For instance, Chubb’s specially developed policy for community banks also includes a pre-determined securities settlement—a feature not usually offered by other insurance carriers—to help eliminate any claim payment issues in the event of a securities loss. You can also be assured of receiving Chubb’s hallmark claim services—prompt and fair claim handling.

Claims Examples

A community bank suffered a significant loss in a check-kiting scheme involving at least two other banks. To compensate for the loss and anticipated legal expenses, the bank held a seven-figure reserve and restated its earnings. The adjustment significantly reduced the bank’s net income, with per-share earnings dropping by almost 50%.

A bank vice president was convicted and sentenced for accepting more than $200,000 in bribes in return for approving loans. The bank lost more than $4 million when the loans defaulted, and it failed soon thereafter.

The claim scenarios described here are hypothetical and are offered solely to illustrate the types of situations that may result in claims. These scenarios are not based on actual claims and should not be compared to an actual claim. The precise coverage afforded by any insurer is subject to the terms and conditions of the policies as issued. Whether or to what extent a particular loss is covered depends on the facts and circumstances of the loss, the terms and conditions of the policy as issued, and applicable law.