Investment Company Blanket Bond

ICI Mutual's Investment Company Blanket Bond (Bond) protects against specified losses caused by employee theft, third-party fraud and various other types of events.

Broad Fidelity Coverage. Rule 17g-1 of the Investment Company Act of 1940 requires registered investment companies to maintain fidelity bonding against employee “larceny” and “embezzlement.” The fidelity coverage in ICI Mutual’s Bond is much broader, extending not only to larceny and embezzlement, but to any “dishonest or fraudulent act” committed with the requisite intent.

Third-Party Fraud Coverages. ICI Mutual's Bond also includes coverages for losses from an outsider's forgery or alteration of checks and other defined instruments (including written requests to redeem fund shares), and from fraudulent requests for transactions made by phone, fax, or over the internet. These coverages have proved especially valuable to ICI Mutual insureds, accounting for a substantial portion of amounts paid to date under the Bond.

Waived Deductibles. ICI Mutual introduced the innovation of "first dollar" coinsurance coverage for certain smaller third-party fraud losses. For a qualifying loss, ICI Mutual will waive an insured’s normal deductible, so as to provide “first dollar” coverage for 80% of the loss, with the insured responsible for the remaining 20%.

No Aggregate Limit. The standard coverages available under ICI Mutual's Bond are offered on an “each and every occurrence” basis, which means that the full stated limit of liability is available to cover each and every “Single Loss,” even if there have been other losses during the coverage period. (Certain specialized coverages available by separate rider may be subject to an overall aggregate limit of liability.)

Computer Security. By a separate rider to the Bond, ICI Mutual makes available to qualifying Insureds computer security coverage for losses resulting from the unauthorized entry, deletion, destruction or alteration of data in an insured’s proprietary computer systems by “hackers” or other unauthorized users.

Coverage for Damages Liability. Unlike many fidelity bonds, ICI Mutual's Bond expressly insures legal liability for direct compensatory damages resulting from a covered loss. For example, in the case of an insured service provider whose employee steals from the mutual fund, the service provider would ordinarily expect to have a corresponding legal liability to the mutual fund for that loss. In this example, ICI Mutual’s Bond (subject to its terms) is designed to insure the service provider for the service provider’s own liability for damages to the mutual fund arising from the mutual fund’s loss.

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