12 CFR 713.5 – What is the required minimum dollar amount of coverage?
(a) The minimum required amount of fidelity bond coverage for any single loss is computed based on a federally insured credit union’s total assets.
Terms Used In 12 CFR 713.5
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Discovery: Lawyers' examination, before trial, of facts and documents in possession of the opponents to help the lawyers prepare for trial.
- Fraud: Intentional deception resulting in injury to another.
| Assets | Minimum bond |
|---|---|
| $0 to $4,000,000 | Lesser of total assets or $250,000. |
| $4,000,001 to $50,000,000 | $100,000 plus $50,000 for each million or fraction thereof over $1,000,000. |
| $50,000,000 to $500,000,000 | $2,550,000 plus $10,000 for each million or fraction thereof over $50,000,000, to a maximum of $5,000,000. |
| Over $500,000,000 | One percent of assets, rounded to the nearest hundred million, to a maximum of $9,000,000. |
(b) This is the minimum coverage required, but a federally insured credit union’s board of directors should purchase additional or enhanced coverage when its circumstances warrant. In making this determination, a board of directors should consider its own internal risk assessment, its fraud trends and loss experience, and factors such as its cash on hand, cash in transit, and the nature and risks inherent in any expanded services it offers such as wire transfer and remittance services.
(c) While the above is the required minimum amount of bond coverage, federally insured credit unions should maintain increased coverage equal to the greater of either of the following amounts within thirty days of discovery of the need for such increase:
(1) The amount of the daily cash fund, i.e. daily cash plus anticipated daily money receipts on the federally insured credit union’s premises, or
(2) The total amount of the federally insured credit union’s money in transit in any one shipment.
(3) Increased coverage is not required pursuant to paragraph (c) of this section, however, when the federally insured credit union temporarily increased its cash fund because of unusual events which cannot reasonably be expected to recur.
(d) Any aggregate limit of liability provided for in a fidelity bond policy must be at least twice the single loss limit of liability. This requirement does not apply to optional insurance coverage.
(e) Any proposal to reduce a federally insured credit union’s required bond coverage must be approved in writing by the NCUA Board at least twenty days in advance of the proposed effective date of the reduction.