Financial Institution Bonds

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Learn everything you need to know about financial institution bonds below, and request a quote today.

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FREE FINANCIAL INSTITUTION BOND QUOTE

What Are Financial Institution Bonds?

Financial institution bonds are a key tool used by businesses in the financial services industry to protect themselves against loss due to the illegal acts of their employees. As a type of fidelity bond, they function more like insurance than like surety bonds, because they protect the business itself, not consumers or a state agency.

These bonds are not mandatory in any state. Rather, financial institutions purchase them voluntarily to protect their own assets, much as businesses outside the financial services industry purchase employee dishonesty bonds, another type of fidelity bond, as protection against loss stemming from criminal activity by their employees.

Who Needs Them?

A wide range of businesses in the financial sector benefit greatly from purchasing this type of bond. These include investment bankers and banking firms, stockbrokers and stock exchange services, mutual funds, hedge funds, private equity firms, finance companies, mortgage lenders, and more.

Owners and leaders of these businesses are motivated to purchase financial institution bonds because of the billions of dollars in losses occurring in the financial sector every year due to fraud, embezzlement, and other illegal acts committed by employees.

How Do They Work?

Most surety bonds guarantee that consumers will be compensated for the financial losses they experience due to the unlawful or unethical business conduct of the bonded individual or entity. In most cases, the consumer can file a claim against the surety bond. With a financial institution bond, however, the institution itself files a claim for financial damages and receives compensation from the bond’s issuer, which is typically an insurance company or surety bond firm affiliated with an insurance company.

The issuer of the bond will investigate any claim submitted by a financial institution claim and make sure it’s valid before paying it. A criminal conviction of the employee(s) who committed the illegal act(s) leading to the financial institution’s loss is usually required before a claim will be paid.

What Do They Cost?

While surety bond companies place great emphasis on a bond applicant’s personal credit score in determining the premium rate for that individual, that is not the case with financial institution bonds. Since the financial institution is the party protected by the bond, not the party required to pay claims, there is no credit risk involved in issuing a financial institution bond. Rather, to determine the cost of a financial institution bond, the issuer looks at the number of employees to be covered, the amount of coverage, and the type of business the financial institution engages in. Credit history only enters into the picture for the largest coverage amounts.

At Surety Bonds Agent, we offer a full range of surety bonds nationwide through an extended carrier network. Learn everything you need to know about financial institution bonds below, and request a quote today.

CONTACT US FOR A

FREE FINANCIAL INSTITUTION BOND QUOTE

What Are Financial Institution Bonds?

Financial institution bonds are a key tool used by businesses in the financial services industry to protect themselves against loss due to the illegal acts of their employees. As a type of fidelity bond, they function more like insurance than like surety bonds, because they protect the business itself, not consumers or a state agency.

These bonds are not mandatory in any state. Rather, financial institutions purchase them voluntarily to protect their own assets, much as businesses outside the financial services industry purchase employee dishonesty bonds, another type of fidelity bond, as protection against loss stemming from criminal activity by their employees.

A wide range of businesses in the financial sector benefit greatly from purchasing this type of bond. These include investment bankers and banking firms, stockbrokers and stock exchange services, mutual funds, hedge funds, private equity firms, finance companies, mortgage lenders, and more.

Owners and leaders of these businesses are motivated to purchase financial institution bonds because of the billions of dollars in losses occurring in the financial sector every year due to fraud, embezzlement, and other illegal acts committed by employees.

Most surety bonds guarantee that consumers will be compensated for the financial losses they experience due to the unlawful or unethical business conduct of the bonded individual or entity. In most cases, the consumer can file a claim against the surety bond. With a financial institution bond, however, the institution itself files a claim for financial damages and receives compensation from the bond’s issuer, which is typically an insurance company or surety bond firm affiliated with an insurance company.

The issuer of the bond will investigate any claim submitted by a financial institution claim and make sure it’s valid before paying it. A criminal conviction of the employee(s) who committed the illegal act(s) leading to the financial institution’s loss is usually required before a claim will be paid.

While surety bond companies place great emphasis on a bond applicant’s personal credit score in determining the premium rate for that individual, that is not the case with financial institution bonds. Since the financial institution is the party protected by the bond, not the party required to pay claims, there is no credit risk involved in issuing a financial institution bond. Rather, to determine the cost of a financial institution bond, the issuer looks at the number of employees to be covered, the amount of coverage, and the type of business the financial institution engages in. Credit history only enters into the picture for the largest coverage amounts.

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Request a quote online or call today to speak with one of our surety bond experts about the financial institution bond you need for your business.