Frequently Asked Questions About Small Business Insurance
Financial Institutions Insurance FAQ. Financial institutions handle, receive, disburse, and invest money of others. They are subject to regulations specific to their operation but they are also subject to legal and moral obligations for their customers. Customers entrust their funds to these institutions because of their confidence in the management's ability.
Insurance is a necessary means to protect the financial institutions and their customers against various types of losses. The financial services offered and the personal relationships created by the institution can only be protected through the use of a sound insurance program and appropriate bonding practices.
We wanted to provide a deeper dive into small business insurance to help our readers get a better understand of the commercial insurance policies they want and need with the Financial Institutions Insurance FAQ.
Read the Financial Institutions Insurance FAQ to learn what type of commercial insurance coverages are right for your company - including liability, property, workers compensation and other specialty policies.
According to Investopedia, "A financial institution is a company engaged in the business of dealing with financial and monetary transactions such as deposits, loans, investments, and currency exchange.."
Financial Institutions include - but are not limited to - the following types of businesses:
You can reference the Insurance Definitions, Dictionary And Glossary to better understand the commercial insurance policy terms and language used in our Small Business Insurance FAQs.
Following are some suggested commercial policies and coverages applicable for money related businesses:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
Larger financial institutions may own or lease aircraft in order for management to more easily visit and supervise operations located throughout a large geographic area. They should purchase the appropriate insurance coverage in those cases.
Types Of Aviation Coverages:
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:
There are many commercial insurance policies available for Financial Institutions. To find out what types of coverage your business needs, speak to a professional insurance broker with experience in insuring financial businesses.
Learn about the coverages available for specific industires with the Insurance FAQs below: