Pub. 1 2012 Issue 6

Aug/Sept 2012 15 l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s When employees transport cash between branches, the cash needs to be delivered directly to the recipient branch without stopping to run other errands. Cash should never be left unattended in a vehicle. Most armored car companies have insurance for robbery or theft of the bank’s cash while they are transporting the cash. However, if the armored car service has made stops at several banks, its insurance may not be adequate to cover all the cash being transported. Most banks have insurance coverage for “In Transit” losses. Specifically, Insuring Agreement (C) of a Financial Institution Crime Bond usually covers this risk. While the armored car service’s insurance applies first, the bank’s insurance protects the bank when the armored car service or their insurer cannot or will not make the bank whole for its loss. It is important to have a good understanding of the conditions for coverage in the bank’s bond so that the bank’s choice for transporting cash does not result in a potentially uninsured loss. The Financial Institution Crime Bond, Insuring Agreement (C) provides coverage for loss frommysterious unexplainable disappearance, misplacement, and destruction of the cash, as well as robbery and theft during the transportation of cash. However, this coverage only applies when cash is transported by a company using an armored car, or when cash is transported by a bank employee. There is no coverage under the bond if the armored car service stores the cash in its vault, or if the employee takes the cash home for the night and plans to deliver it to the branch the next morning. A robbery of the cash or destruction of the cash while at the employee’s home or while stored at the armored car service location is not covered by the bond. Some armored car services are offering a cash management service where the bank’s cash is stored in the armored car service vault and is used for delivery to the bank’s branches when needed. While this eliminates the armored car service from having to stop at the bank’s main location to pick up the cash, the bank needs to be aware that its Financial Institution Crime Bond does not cover the cash stored in the armored car service vault. If the bank enters into this type service, the bank needs to make certain the armored car service has insurance that is sufficient to protect the bank if a robbery of the armored car company’s vault results in a loss of all of the cash belonging to multiple banks. Continued on page 16 Secrecy is of utmost importance when an employee transports cash.