Summaries of Various Polices

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Summaries of Various Policies Continued

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Financial Institutions Blanket Bond Insurance

The Financial Institutions Blanket Bond policy generally provides coverage to the bank on a blanket basis for certain fraudulent acts committed by employees and customers that cause the bank a loss. The policy covers all bank employees when the bond is issued and all future employees automatically without notice to the insurer. This is a package policy designed to provide the bank with coverage for a wide variety of loss in a single contract. Loan losses are generally excluded unless they are caused by employee dishonesty, reliance upon forged or altered negotiable instruments or forged, counterfeit, stolen, lost or altered collateral type documents. Some computer systems losses are covered if the losses arise directly from fraudulent entry of data into, or change of data elements or programs within the bank’s computer system or a system listed by the bank in an attached schedule, except when the loss results from fraudulent acts of employees, processors and contractors under the supervision of the bank. While many carriers use the Surety Association’s bond forms, careful attention should be given to policy provisions, exclusions and general insuring agreements.

Computer Crime Insurance

The Computer Crime Policy provides broader coverage for direct electronic and computer crime losses other than fidelity losses, covered by the fidelity bond policy. Coverage is provided for all of the same exposures as those covered by the Computer Systems rider to the financial institutions blanket bond policy. In addition, coverage can be provided for fraudulent voice or telefacsimile instructions, destruction of data by hackers or virus, fraudulent input, modification or destruction of electronic data while the bank is acting as a service bureau for a customer. Coverage differs from carrier to carrier. Careful attention should be paid to the specific exposures of each bank and the coverages available in any such computer crime policy.

Mortgage Impairment Insurance

The Mortgage Impairment policy protects a bank's interest in real property if the property is damaged or destroyed and the loss is not insured due to a lack or insufficiency of hazard insurance. The policy covers the bank if the borrower fails to carry the required property hazard insurance and as long as the bank does not know that such hazard insurance is not in force. The policy can also protect the bank against loss to its interest in real property due to an error or an omission by a bank employee in failing to place or maintain the appropriate insurance protection, pay real estate taxes, perfect titles, and many other duties and functions associated with the making and servicing of such loans.

Debit/Credit Card Issuers Insurance

The debit/credit card issuers insurance policy provides coverage for loss from fraudulent use of a debit card or credit card at an electronic terminal or from fraudulent use of a debit or credit card where property, labor and/or services are sold and delivered by a merchant to an individual purporting to be the card holder using a telephone, fax machine, the postal service or personal computer. Coverage is worldwide and does not require embossing on a card or an application.

Lenders Single Interest Insurance

Lenders Single Interest insurance protects the financial institution from damage or loss that can occur before or after repossession and while the financial institution holds the property in its possession. This coverage can also protect the institution if its interest is not perfected due to an error or omission. Covered loans include personal or consumer loans made for automobiles, watercraft, recreational vehicles, mobile homes and aircraft.

Internet Banking Liability Insurance

The Internet Banking Liability policy provides affirmative broad-form coverage for suits against the Financial Institution and its directors and officers, including allegations of invasion of privacy, libel, slander and defamation; loss or damage to electronic data of the customer; denial, impairment or interruption of service; loss of business opportunity; unauthorized access to a customer account; infringement of copyright, misappropriation of ideas and plagiarism; infringement of trademark, trade name or service mark and misappropriation of trade secrets; as well as other causes of action arising directly out of provision of Internet banking services by the bank. Business interruption, extra expense, cyber/network extortion and public relations expense coverage are also available by endorsement.

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