Locked Funds Insurance is a little known hybrid insurance policy jointly
issued by governments and banks. It is used to protect public funds from
tamper by unauthorised parties. In special cases, a government may
authorise its use in protecting semi-private funds which are liable to
tamper. Terms of this type of insurance are usually very strict. As such
it is only used in extreme cases where maximum security of funds is
Locked Funds Insurance policies are not exactly insurance policies in
the real sense. They possess characteristics similar to both ordinary
types of insurance covers and International protectorate documents
therefore they are more correctly known as hybrid policies.
They exist in 4 main classes: Class A, B, C and D (in decreasing order
of strictness of terms). Additionally, these could either be
"Interferral" or "Non-Interferral". The Interferral category allows its
terms to be modified by special authority of the issuing government
while the terms of the Non-Interferral category can only be modified by
clauses present within the policy itself.
Locked Funds Insurance policies provide the highest level of security
for funds and are rarely used because of the amount of protocol involved
in its issue. Any amount of money protected by this type of cover is
virtually impossible to tamper with, except the terms with which the
insurance was drawn permits for such.
In effect, it eliminates unauthorised tamper for funds usually in excess
of US$1,000,000 (One million United States Dollars).