FOR IMMEDIATE RELEASE
December 15, 2011
ABA Media Contact: John Hall
(202) 663-5473
E-mail: jhall@aba.com
Follow us on Twitter: @ABABankingNews

ABA INSURANCE SERVICES ANNOUNCES FOREIGN CHECK RIDER

WASHINGTON — The ABA has announced that ABA Insurance Services, the ABA-endorsed program providing D&O and bond coverage for community banks, has introduced a new Foreign Check Rider which extends bond coverage to include fraudulent Canadian checks. The program is managed by ABA Insurance Services Inc., a managing general agency based in Cleveland, Ohio.

This addresses an important coverage gap that exists due to differences between U.S. and Canadian regulations regarding rights to revoke payment when fraud is discovered. 

Typically, losses due to fraudulent Canadian checks are not covered under a bank’s bond because they are precluded by an exclusion that bars coverage when domestic banks honor fraudulent checks issued by financial institutions outside of the United States.  ABA Insurance Services’ Foreign Check Rider expands forgery coverage to include forged or altered checks drawn upon Canadian financial institutions by modifying the exclusion.

Domestic banks are subject to the Uniform Commercial Code’s “Midnight Deadline” as well as Federal Reserve Regulation CC, which limit the amount of time a bank has to revoke settlement. However, foreign banks, including Canadian banks, are not subject to the UCC or the Federal Reserve’s rules. Instead, Canadian banks’ right to revoke settlement may be as long as one year from the date that the item is discovered as fraudulent, regardless of when the fraud is discovered. Because the discovery period can be indefinite, an item is never finally paid like domestic items; therefore, foreign checks are unavoidably subject to the bond’s exclusion. The Foreign Check Rider from ABA Insurance Services remedies this issue.

“Bankers and agents have been requesting this coverage based on the issues involving fraudulent checks drawn upon Canadian financial institutions,” says John N. Wells, president and CEO of ABA Insurance Services. “We feel it is important to address this need by bringing our Foreign Check Rider to the market.”

“The Foreign Check Rider is another great example of how ABA Insurance Services continually seeks ways to add value and protections to our insured banks in the program,” says John Wolff, president of Corporation for American Banking.

The Foreign Check Rider is available currently in all states except Alaska, California, Colorado, New York, Texas and Washington. For more information or for a quote, call or have your agent call ABA Insurance Services at 800-274-5222 or visit abais.com.

About American Bankers Association

The American Bankers Association represents banks of all sizes and charters and is the voice for the nation’s $13 trillion banking industry and its two million employees. The majority of ABA’s members are banks with less than $165 million in assets. Learn more at aba.com.

About Corporation for American Banking

The Corporation for American Banking is an affiliate of the American Bankers Association that endorses bank solutions on behalf of the Association, helping banks save money, make money, and operate more efficiently. Solutions range from mission-critical insurance, compliance and risk management programs to services that help banks stay competitive and efficient through technology and business growth platforms.  These programs are also supported by State Bankers Associations through co-endorsement relationships.

About ABA Insurance Services

Endorsed by the American Bankers Association through its subsidiary, Corporation for American Banking, ABA Insurance Services serves the banking industry by offering D&O, bond and related liability insurance to community banks across the country. This unique bank owned and directed insurance program has been a market leader for twenty-five years and is recognized by insurance and banking professionals as a secure, stable and affordable source of coverage.  ABA member banks that are insured by ABA Insurance Services are eligible to receive distributions when declared by the program’s reinsurer, American Bankers Mutual Insurance Ltd., which has declared over $76.8 million in distribution(s) to banks since 1991.  For more information, visit www.abais.com.

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