Financial Institution Bond

FI bonds provide coverage for losses that result from dishonest or fraudulent acts committed by covered parties, such as employees or directors. If a bonded business suffers a loss due to covered acts, they can file a claim to be reimbursed for any damages they paid out.

When a loss occurs, the surety company will pay the financial institution for the loss up to the full amount of the bond. The surety company will then attempt to recover the funds from the person or persons who caused the loss.

Financial institutions, including banks, credit unions, and other financial service providers, typically need an FI bond to comply with state and federal regulations. Additionally, investors and customers may require institutions to have an FI bond to protect their interests.

There are four main types of financial institution bonds for different entities:

• Form 14: Stock exchange services, stock brokers, investment companies and bankers, securities investor protection firms, foundation and endowment funds, mutual funds, and commodity brokers
• Form 15: Finance companies, mortgage companies, mortgage real estate investment trusts, finance firms, and small loan companies
• Form 24: Trust companies, loan and building associations, national commercial banks, U.S. subsidiaries of foreign banks, and title insurance companies
• Form 25: Insurance and reinsurance companies

The cost of this surety bond varies depending on the following factors:

• Type of bond (based on the company type)
• Number of employees
• The bond amount required (amount of coverage you need)

In general, the cost of the bond will range from 1% and 5% of the bond amount.