Advisories
Advisory 8
Minimum Levels Of Bonding And Insurance Coverage
The Credit Union Act provides that A credit union
shall maintain such types and minimum levels of
insurance and bonding coverage as may be determined
from time to time by the Corporation. (Section 54,
Credit Union Act)
To protect the interests of depositors, every credit
union should maintain insurance coverage against
a number of specified risks.
An Insurance Committee established by Credit Union
Central with management representation from each
district has made recommendations on minimum levels
of bonding and general liability insurance coverage
to be instituted in Nova Scotia credit unions.
The Credit Union Deposit Insurance Corporation,
therefore, advises that every credit union must
maintain insurance against the following risks with
the minimum coverage as specified:
BOND
Each credit union shall maintain insurance through
the Master Bond Program as administered by Credit
Union Central against loss due to dishonest or fraudulent
acts of employees, officers, directors, and committee
members of the credit union and all its subsidiaries.
The credit union shall also maintain coverage for
money and negotiable securities on the premises
and in-transit, counterfeit money and negotiable
securities, forgery, computer fraud and related
risks as covered under this program.
An employee, officer, director, or committee member
may not continue to serve in that capacity if not
bonded under the Master Bond Program.
DIRECTOR LIABILITY
Each credit union shall maintain Director Liability
insurance through a Master Policy administered by
Credit Union Central.
The Director Liability insurance shall provide
coverage for any amount a director is legally obligated
to pay, or the credit union is permitted by law
to pay to a director, due to a wrongful act, including
interest from the entry of judgment to the date
of payment and defense costs.
GENERAL LIABILITY
Effective January 1, 1997, all credit unions must
maintain a minimum general liability coverage of
$1,000,000. For credit unions with assets in excess
of $10,000,000, this coverage is to be increased
to $2,500,000 and for those with greater than $25,000,000
in assets, minimum coverage is to be $5,000,000.
Return to Advisories
