Bonds are a great way to reduce your overall risk management costs by providing an alternative to insurance in areas where traditional insurance policies are not cost-efficient for financial institutions. Each type of financial company has its own dedicated format for comprehensive risk management bonds, as well as options to buy bonds for specific risks if additional coverage is needed. Mortgage broker bonds built for comprehensive coverage are a bit like the bond version of your general liability coverage, but instead of covering common liabilities they cover common areas of exposure due to employee or officer behavior.
Bonds typically protect against employee dishonesty and malfeasance. That includes on site crime, fraudulent closures, theft from clients, embezzlement, and other common risks for mortgage companies. The cash provided by the bond in the event of a claim is designed to protect you in the event of financial exposure due to those acts, which means they often pay out for legal expenses in addition to settlement costs. That allows you to fight false allegations with fewer losses, but more importantly, it provides for the eventual settlement if it turns out your employee did act in bad faith. That makes it easier for you to have peace of mind as your work force expands.