Bankers Indemnity Insurance
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Frequently Asked Questions
1. What is the reinstatement clause?
If a claim exhausts the sum insured, the policy allows one automatic reinstatement, restoring the coverage once, by charging additional premium.
2. What documents are needed to purchase this policy?
Proposal form, list of branches, employee headcount, risk exposure estimates (like cash in transit/on-premises), and desired sum insured.
3. What if a fraud is discovered 3 years later?
It won’t be covered. Losses must be discovered within 2 years from the date they occurred, and within an active policy period.
4. Does the policy cover frauds by new hires?
Yes, but only if the employee has no prior record of dishonesty and proper background checks are done. Repeat offenders or re-employed fraudsters are excluded.
Safeguarding Financial Institutions from Operational Risks
Banks and financial institutions deal with massive volumes of money, documents, and sensitive transactions every single day. With that comes a unique set of risks, from cash thefts and employee fraud to forged cheques and postal losses.
Bankers Indemnity Insurance is a specialized policy designed to shield banks, NBFCs, and similar institutions from such financial threats.
What Does It Cover?
The policy provides financial protection against:
- Loss or damage to cash or securities within premises (due to fire, burglary, riots, etc.)
- Theft or robbery during transit, while being carried by authorized employees
- Forgery or alteration of key documents like cheques, FDs, drafts
- Employee dishonesty in handling cash, securities, or pledged goods
- Loss during registered post dispatches
- Dishonest acts by appraisers or agents like Janata Agents, Chhoti Bachat Yojana Agents
This policy is issued on a discovery basis. That means the insurer covers losses discovered during the policy period, even if they occurred earlier (up to 2 years back), provided the cover was active during that time. This protects institutions from delayed fraud detection, which is common in financial crimes.
Exclusions
The policy does not cover:
- Trading losses
- Negligence or careless business decisions
- Cyber fraud or software crimes
- Dishonesty by directors or partners
Scope of Coverage
The policy has seven core sections, each targeting specific operational risks:
- On-Premises Cash/Securities Loss
- Loss in Transit
- Forgery or Document Alteration
- Employee Dishonesty
- Loss involving Hypothecated Goods (goods pledged to the bank as collateral)
- Losses during Registered Postal Service (Covers losses from items sent via registered post)
- Dishonesty by Appraisers or Agents
What’s the Sum Insured and How Does It Work?
- The sum insured is the total amount up to which the insurer will pay for losses.
- It typically floats across multiple sections (like transit, on-premises, etc.), meaning the same total limit applies to different risks.
- Banks can choose additional cover for sections with higher risk (like more cash movement or high-volume branches).
- If a claim uses up part of the sum insured, one automatic reinstatement is allowed, meaning the original coverage is restored once by paying extra.
Premium Calculation
The premium depends on:
- Basic & additional sum insured
- Number of employees
- Number of operational branches