Financial Institutions Insurance FAQ

• At the minimum, financial institutions need prossional liability insurance or errors and omissions (E&O).
• Most financial institutions should have general liability insurance.
• If they have employees they will need workers compensation in most states.
• If they have vehicles registered to the business, or use vehicles for the business purposes, they will also need commercial auto.
• There are also other specialty coverages and endorsements that might be needed based on their operations.

Commercial package policies are the most convenient way to combine several coverages under one policy. Financial institutions are limited to only the commercial package policy (CPP). The crime coverages that can be packaged for other industries are not available for financial institutions.

Types Of Financial Institutions Package Policies:

• Commercial Package Policy (CPP)

The property exposures of most financial institutions are often limited to office-type exposures and substantial amounts of money and/or securities on the premises. Even though money and securities are excluded in most property coverage forms, the building and other personal property damaged because of an attempted theft or break-in are covered.

Financial institutions may also be responsible for arranging property insurance for trust accounts and on foreclosed properties. Most financial institutions do not sustain significant business income losses but may incur a substantial extra expense loss in order to meet the regulatory requirements of remaining open even after a property loss.

Types Of Property Coverages:

• Building
• Business Personal Property
• Personal Property of Others
• Improvements and Betterments

Some financial institutions purchase mail coverage to protect valuable securities sent through the mail. Other coverages may be needed, depending on the type of financial institution and the manner in which it operates. A thorough property inventory can be used to determine the most appropriate property or inland marine coverage form to use for insurance protection for certain types of property.

Types Of Inland Marine Coverages:

• Accounts Receivable Coverage
• Commercial Articles Floaters
• Difference in Conditions (DIC) Coverage
• Electronic Data Processing Equipment Coverage
• Fine Arts Coverage
• Mail Coverage
• Scheduled Property Coverage
• Signs Coverage
• Transportation Coverage
• Valuable Papers and Records Coverage

Financial institution bonds provide the appropriate crime coverages for financial institutions. Financial Institution Bond #24 is the most common form used by banks and savings and loan operations. Other bond forms are used with specific businesses or for special applications.

Types Of Crime Coverages:

• Computer and Funds Transfer Fraud Coverage
• Employee Theft Coverage
• Forgery or Alteration Coverage
• Inside The Premises-Theft of Money and Securities Coverage
• Inside The Premises-Robbery or Safe Burglary of Other Property Coverage
• Money Orders and Counterfeit Money Coverage
• Outside The Premises Coverage

Financial institutions may be required to provide a number of different bonds because of their relationships with clients and regulatory agencies.

Types Of Surety Coverages:

• Court Bonds
• Fiduciary Bonds
• Miscellaneous Surety Bonds
• Notary Public Bonds

The general liability exposures for financial institutions are similar to those of other office buildings, except for the added loss potential due to holdups because of the amount of money on the premises. Most of the unusual exposures to loss are covered by one of the professional liability coverages.

Types Of Liability Coverages:

• Commercial General Liability (CGL) Coverage
• Employee Benefits Liability Coverage
• Employment-Related Practices Coverage
• Special Events Liability Coverage

Most financial institutions employ a number of professionals performing a variety of tasks and professional services. The institution should prepare a list of all such operations to determine the appropriate insurance protection needed for the professional errors and omissions of these employees and their activities.

Types Of Errors And Omissions (E&O) Coverages:

• Accountants Professional Liability Coverage
• Errors and Omissions - Miscellaneous Coverage
• Insurance Agents and Brokers Errors and Omissions Coverage
• Law Enforcement Liability Coverage
• Lawyers Professional Liability Coverage
• Mortgage Bankers and Servicing Agents Errors and Omissions Coverage
• Registered Representative Errors and Omissions Coverage
• Title Abstractors Professional Liability or Errors and Omissions Coverage
• Trust Department Errors and Omissions Coverage

Private passenger automobile fleets, including hired and non-owned auto, are the major automobile exposures for most financial institutions. In addition, garagekeepers coverage may be needed where any valet parking operations are conducted. Single interest insurance coverage may be used by entities that provide financing for automobiles.

Types Of Business Auto Coverages:

• Auto Medical Payments
• Business Auto Coverage
• Collision Coverage
• Comprehensive Coverage
• Garagekeepers Coverage
• Hired & Non-owned Auto Coverage (HNOA)
• Single Interest Insurance Coverage
• Uninsured/Underinsured Motorists Coverage

Most employers are required by state statute to provide coverage for on-the-job injuries sustained by their employees through a workers compensation policy or comparable self-insurance plan.

In monopolistic states where the only option is a state-issued workers compensation policy, a separate stop gap or employers liability policy is to fill a very important coverage gap.

Types Of Workers Comp Coverages:

• Excess Workers Compensation Self-Insurance Bonds
• Stop-Gap or Employers Liability Coverage
• Workers Compensation and Employers Liability Coverage

Although financial institutions have limited liability exposures, they are very high profile businesses in a community. As such, they need to carry higher limits of liability in case of a claim. These higher limits can be secured by purchasing umbrella or excess liability insurance. All liability policies, including professional, should be listed on the policy declarations.

Types Of Excess Liability Coverages:

• Excess Liability Coverage
• Umbrella Coverage

Financial institutions may become involved with a variety of exposures because of their business relationships with their clients. The institution should prepare an inventory of these exposures and activities and develop a list of special coverages needed to provide the appropriate insurance protection.

Types Of Specialty Coverages:

• American Expatriate Coverage
• Business Legal Expense Coverage
• Collateral Protection Coverage
• Commercial Credit Coverage
• Cyber Liability Coverage
• Data Security Breach Coverage
• Directors and Officers Liability Coverage
• Export Credit Insurance Coverage
• Fiduciary Liability (Pension, Welfare and Employee Benefit Funds) Coverage
• Identity Theft Insurance Coverage
• International Insurance Coverage
• Tax Liability Coverage
• Tender Offer Defense Expenses Coverage
• Terrorism Insurance Coverage
• Title Insurance Coverage