What does a bankers bond not cover?

A banker's bond, also known as a financial institution bond, provides coverage primarily for the financial institution's operations, protecting against a variety of risks inherent in banking. The role of a banker's bond is to safeguard against losses stemming from fraudulent activities like theft or embezzlement by employees, and to ensure the institution meets certain regulatory requirements.

When examining what a banker's bond does not cover, guarantees of drafts fall outside its scope. Drafts are essentially orders to pay money and involve additional liabilities that a typical banker's bond is not designed to manage. Instead, guarantees of drafts often require separate arrangements or bonds that are specifically aimed at ensuring that a bank will honor these financial promises.

In contrast, performance obligations, payment bonds, and owner’s liabilities are generally related to financial performance and completion of projects where guarantees or surety bonds might be applicable. Performance obligations and payment bonds involve ensuring that a contractor completes the work as agreed and pays for certain services or materials, which are considered in the realm of business operations rather than specifically banking activities. Owner's liabilities relate to responsibilities associated with property or service execution, which are typically covered by different kinds of bonds or insurance products.

Therefore, guarantees of drafts represent a responsibility related to transactional guarantees that are typically