Bankers Blanket Bond Insurance


A standard Bankers Blanket Bond (BBB) offers seven basic areas of coverage, as follows:
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Infidelity
The coverage is in respect of the losses sustained due to the dishonest or fraudulent acts of the Insured's employees.
Losses sustained under this category of coverage do not distinguish between any particular job position, level, or territory, and has traditionally been the single largest area of losses incurred by financial institutions. In some extreme cases these types of losses have forced institutions into liquidation.

It should be noted that there are many definitions of "employee" and in accordance with their requirements, each financial institution should seek to obtain the widest available definition to suit their individual needs.

It should also be noted that whilst the standard Bankers' Blanket Bond policy has provision for the dishonest and/or fraudulent act of employees involved in trading, coverage usually excludes "trading losses" which arise through the negligent act of employees (i.e. breaching trading guidelines on foreign exchange transactions). Actions involving the infidelity of employees shall be covered only when they involve "improper personal financial gain".

In view of the foregoing the careful wording of this clause is imperative, to ensure adequate protection of the institution's interests.
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On Premises
The definition of "premises" varies. Obviously the most important premises are the offices of the insured institution, and coverage is automatically afforded to all offices, or premises, in existence at the inception of the bond. Also included are the premises of any other institution for which the Insured party has care, custody and control.

Valuable property on the institution's premises such as gold bullion, precious metals and of course cash are included within this coverage, and if necessary coverage may be extended further to include such items as certificates of deposit etc.

Again it is possible to expand coverage to include any special instruments or property peculiar to each institution's requirements.
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In Transit
Valuable property in transit - coverage in respect of loss or damage whilst in transit. Most policy wordings restrict coverage to property loss "while items are in the custody of any employee or an armoured car or security company". It is also possible to purchase coverage pertaining to property sent by registered post, air freight or another form of recognised or agreed method of transportation.

Many armoured car companies will provide free coverage for goods whilst in their care and during transit, and such contractual obligations should be considered when negotiating transit coverage. In such cases a Bankers' Blanket Bond policy provides beneficial contingency coverage.
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Forgery
The forgery section of the Bankers'' Blanket Bond policy can provide cover against a financial loss, which results from having acted in good faith upon "written instruments" or "payment instructions", if these prove to be forged, or fraudulently altered, lost or stolen, or forged as to signature. Often this clause is split into two parts with one covering the forgery or alteration of cheques and the like, and the other specifically covering forged or altered securities including stocks, bonds and share certificates
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Forgery/Counterfeit Securities
The standard Bankers' Blanket Bond policy separates this form of coverage from the forgery section, and covers losses arising from situations where the institution has "acted upon" (e.g. accepted as collateral) any forged or fraudulently altered securities.

This area of coverage is now frequently being extended to incorporate uncertified (i.e. electronic) securities and the statements representing such securities.
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Counterfeit Currency
Coverage in this respect indemnifies the institution for losses sustained as a result of its acting upon any counterfeit currency, for example the encashment of counterfeit currency handled during the normal course of business.

This coverage is particularly beneficial for those institutions which handle foreign currencies and/or have Bureau de change facilities.
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Damage to Offices and Contents
Coverage in respect of the cost of replacing equipment and the reconstruction of premises due to loss or damage incurred as a result of robbery, hold up or burglary. This section of coverage will not include losses due to fire, either in respect of damage to buildings or general office contents.
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Edward Howard Insurance Services Ltd. is authorised and regulated by the Financial Services Authority. FSA Reference Number 306921 Registered in England. Company No. 3520697