Do bonds provide adequate protection from scams to financial institutions? An excellent article in National Underwriter (here) outlines some of the coverage issues, particularly regarding mortgage fraud. The article points out:
The two insuring perils common to most crime insurance policies and bonds are: employee dishonesty, covering situations where an insider has something to do with the fraud, and “securities extended forgery,” covering losses sustained in connection with loans.
A nearly $500,000 check in New York highlights the situation (see here). A bank accepted the deposit, and the money was subsequently wired to China before the bank determined the check was counterfeit. The bank has sued their insurer for failure to cover the loss.
Brought to you by Tennant Risk Services.
It's frustrating to be in this kind of situation - mortgage fraud. It's really hard to rely someone when it comes to financial matters.
Luke@Insurance Agent Forum
Posted by: Luke | January 02, 2010 at 10:59 PM
Very nice updates. I’ve been following the this site closely. I like every blog post.
diane@Life Insurance Calculator
Posted by: diane | December 11, 2009 at 07:24 PM
That's scary that the insurer failed to cover the loss. It's always good to be prepared or prevent this situations.
Drei@Life Insurance Questions
Posted by: Drei | December 06, 2009 at 01:45 AM