Financial Institution Bond For Lending and Depository Institutions

It is important for financial institutions to have protection from instances of employee dishonesty, fraud and other illegal acts, through the Financial Institution Bond (FI Bond). No matter what industry sector your financial organization is in, and no matter the size of your institution, your financial institution needs safeguarding against a range of potential financial threats, ensuring that your institution can operate with confidence and stability. 

FI Bond Overview

A financial institution bond, or FI bond, is sometimes referred to as a fidelity bond or bankers blanket bond. As required by regulators for financial institutions, fidelity coverage is provided through an enhanced version of the Surety and Fidelity Association of America Form 24, as of May 2011. Be aware of older versions of the FI bond as older versions lack important coverages that financial institutions need today. Four Insuring Agreements comprise “basic” coverage: 


As employee dishonesty represents the greatest threat to a financial institution, Fidelity is the most important part of a financial institution’s Bond coverage. Fidelity covers dishonest or fraudulent acts committed by employees acting alone or in collusion with others. Note that the employee must have intended to cause a loss to the financial institution and to obtain an improper financial benefit for the employee or another. If some or all of the loss results from loans, the employee must also have been in collusion with a party to the transaction and received an improper financial benefit. 

On Premises

On Premises covers losses resulting from burglary, robbery, misplacement, or mysterious unexplainable disappearance of property (except while in transit). Losses resulting from theft, false pretenses, and larceny are also covered if committed by a person while on the premises of the bank. Damage to the insured’s furniture or fixtures resulting from the above-listed acts is also covered under this Insuring Agreement (unless caused by fire).

In Transit

In Transit covers losses of certain defined property, including money, while in transit. Losses must be a direct result of robbery, larceny, theft, misplacement, mysterious unexplainable disappearance, damage or destruction to the property. If the property is being carried by a transportation company but not in an armored vehicle, only records, certificated securities in registered form and not endorsed (or with restrictive endorsements), and negotiable instruments not payable to the bearer and not endorsed (or with restrictive endorsements), are covered. 

Counterfeit Money 

Counterfeit Money covers losses resulting from the financial institution having received in good faith counterfeit currency of any country. A common example would be an employee who alters the amount of a check before cashing, likely pocketing the difference.

How FI Bonds Protect Financial Institutions

FI bonds protect financial institutions in a number of ways, by safeguarding assets and stakeholder interests. This specialty insurance offers a multi-layered defense against certain and specific direct losses from internal and external threats. These bonds protect against employee dishonesty, theft, fraud, and forgery, ensuring institutions can recover financially from crimes such as embezzlement or the alteration of financial documents. By providing comprehensive coverage for a variety of risks, FI bonds enable financial institutions to operate with increased security and peace of mind.

This protection not only preserves the financial health of institutions but also upholds their reputation in the industry, giving them the added security necessary to focus on growth and customer service without the looming worry of potential financial setbacks.