Financial institution insurance is an insurance product targeted at financial institutions like banks and credit unions to address potential liability issues ranging from malpractice to property damage. Numerous insurance companies offer this product and may provide bundles of common services at a lower price for their customers. Like other insurance products, it typically comes with a variety of limitations and requires the payment of premiums to remain current. When it expires, no coverage is offered.
One aspect of financial institution insurance covers professional liability issues. This includes malpractice by the board and management as well as inadvertent data release and other compromises. Another potential liability can be employment issues, such as discrimination or sexual harassment suits. Financial crimes like money laundering, theft, and counterfeiting can also be covered by this insurance product. Loss prevention services are available through some financial institution insurance policies.
Another aspect of financial institution insurance is physical premises insurance. If customers slip and fall, the insurance can provide coverage. Likewise, the insurance can pay for property damage associated with theft and other activities, and may also offer some protection for environmental hazards like flooding and earthquakes. Contents like desks, computer equipment, and so forth can also be covered under an insurance policy.
The financial risks in the financial industry can be considerable. Using a tailored insurance product can increase the chances that an event will be covered. In addition, because some risks are much higher, many standard business insurance policies actively exclude financial institutions. Thus, it may be necessary to purchase financial institution insurance to access full financial coverage for events that may occur in the course of business. Insurance companies that specialize in this service take advantage of a large risk pool to reduce their own risks by distributing them as much as possible.
Insurance companies that provide this service typically have brochures with information about their offerings. Agents can meet with bank officials to discuss the type of coverage needed and what the insurance company can offer, as well as provide a quote. Banks typically solicit quotes from multiple providers of financial institution insurance to learn about the range of options available, and may attempt to negotiate better rates like bundled discounts. As with any insurance policy, it is important to understand the terms and conditions at the time of purchase, as these can have an impact on the types of claims the bank can make.
