Financial Institution Bond
What is a financial institution bond?
A financial institution (FI) bond is a type of fidelity bond that protects financial institutions from losses due to employee dishonesty, burglary, robbery, and other crimes.
The bond ensures that the financial institution will be reimbursed for any losses that are caused by the actions of its employees or other third parties. These bonds are designed to protect the institution’s assets, including deposits, investments, and loans.
Get Your Financial Institution Bond:
Quick Takeaways
- A financial institution bond protects financial institutions from losses due to employee dishonesty, burglary, robbery, and other crimes.
- 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.
- Financial institutions, including banks, credit unions, and other financial service providers, typically need an FI bond to comply with state and federal regulations.
How do financial institution bonds work?
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.
Who needs a financial institution bond?
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.
4 Types of Financial Institution Bonds
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
How much do financial institution bonds cost?
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.
Frequently Asked Questions
Yes, it is possible to obtain an FI bond with poor credit. In fact, credit typically doesn’t play a role in the ability to obtain this bond.
A banker’s blanket bond (BBB), or blanket fidelity bond, also protects financial institutions from losses due to illegal and dishonest acts by employees. These acts may include things like:
- Cyber fraud
- Extortion
- Physical property damage or loss
- Forgery that leads to financial loss
BBB bonds act as insurance coverage employers when their employees commit dishonest and illegal acts for personal gain, opposed to employees behaving unethically in hopes of making the financial institution appear more financially stable (Investopedia). This sets them apart from FI surety bonds.
Apply for Your Financial Institution Surety Bond
ZipBonds offers the fastest and most secure option for getting the surety bonds you need. Our all-digital platform is intuitive and straightforward. Apply online or call us at (888) 435-4191 to speak with an agent. Most of our bonds are approved and processed immediately from our site.
About ZipBonds.com
Founders Ryan Swalve and Zach Mefferd formed the vision for ZipBonds.com when they realized how overly complicated it was to help clients place surety. The frustration of being unable to incorporate the technology they’d used in other insurance-focused projects left them thinking “there has to be a better way.”
Fast forward a couple of years, and that better way is the impetus of everything we do at ZipBonds. We constantly look for innovative ways to improve the bonding process for our clients and agents. Our team comprises individuals who understand all angles of surety – for companies, agencies, and individuals. Incorporating everyone’s point of view to improve the process while simultaneously integrating cutting-edge technology is what sets our business apart.