Credit Union Insurance Policy Information
Credit Union Insurance. Credit unions are non-profit financial institutions owned by their members, who are often a group of people with a common interest such as membership in a trade union or alumni association. Credit unions were originally formed to provide low-interest loans to their members.
These members deposit money and have ongoing access to their funds through ATMs, checks, or electronic means. They have the right to close their accounts and withdraw or transfer their money to another financial institution.
Credit unions earn income from interest charged on loans, profits from investments, and transaction fees. They may offer financial planning or investment services. To maintain public confidence in the industry, credit unions are highly regulated at the federal and state level.
The regulations change frequently so additional operations may be added as permitted.
Many Americans are choosing credit unions for their financial needs over traditional banks. Unlike banks, which are owned by large corporations, credit unions are owned by the members of the institution. As such, whatever profits a credit union does make goes back to the institution itself to improve the services that their members receive, or the funds are invested in the community. Additionally, credit union members enjoy lower fees and better rates on savings than traditional financial institutions provide.
Despite the numerous benefits that credit unions offer, there are risks associated with this type of financial institution. Since they hold the money of their members, it's the job of a credit union to protect those funds. Despite the best efforts of credit union operators to provide exceptional services and to protect the interests of their members, unforeseen problems can arise.
Therefore, it's important that you take the necessary precautions to protect your credit union and the members it serves. What's the best way to do that? - By carrying the right type of credit union insurance coverage.
credit union insurance protects your member-owned business from lawsuits with rates as low as $67/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked credit union insurance questions:
- How Much Does Credit Union Insurance Cost?
- Why Do Credit Unions Need Insurance?
- What Type Of Insurance Do Credit Unions Need?
How Much Does Credit Union Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small credit unions ranges from $67 to $89 per month based on location, size, payroll, sales and experience.
Why Do Credit Unions Need Insurance?
When it comes to money, problems are always a possibility. A credit union could be robbed, for example, and members' money could be stolen. A fire could erupt, damaging the structure that the credit union operates out of.
A member could trip, fall, and suffer an injury while making a deposit. An employee could be injured while working. These are just some of the problems that could arise.
When unforeseen problems do arise, you will be held liable. Your liability means that you are responsible for covering the cost of any losses, damages, or injuries that may occur; the cost of which could be excessive.
To avoid having to pay for these expenses out of your own pocket, investing in the right type of credit union insurance is important.
What Type Of Insurance Do Credit Unions Need?
There are several forms of insurance coverage that a credit union should invest in. Examples of policies that these financial institutions should carry include the following:
- NCUA Insurance - This type of insurance is backed by the National Credit Union Administration (NCUA). The NCUA is associated with the federal government, but it is an independent agency. NCUA insured credit unions protect up to $250,000 of their members deposits. This type of insurance coverage is crucial, as it certifies that should anything go wrong with the deposits that are made in your financial institution - a theft, for example - those deposits will be protected by the federal government.
- Excess Insurance - With excess insurance, your members' deposits will be protected beyond the $250,000 that NCUA insurance offers. Should members have amounts that are higher than $250,000 deposited in your credit union, excess insurance will guarantee they are covered from losses above the NCUA limit.
- Commercial Property - In addition to protecting your members' money, it's also important to protect the commercial space that a credit union operates out of. Commercial property insurance protects the structure of the credit union, as well as the contents that are housed within it, such as inventory, supplies, and equipment. This type of policy provides protection against acts of nature, such as fires, storms, and fallen trees, as well as acts of vandalism, such as graffiti or broken windows.
- Commercial General Liability - If member or a vendor slips and falls on the credit union's property, or if someone claims that an employee of the credit union damaged their property, commercial general liability insurance will protect you. This form of insurance protects you against third-party accidents and injuries; it pays for the cost of any legal fees, as well as damages that may be awarded.
- Workers' Compensation - If you have employees in almost any state - you'll also need to invest in workers' comp insurance. This form of coverage will cover the cost of any medical expenses and lost wages should an employee sustain a work-related injury or illness.
These are just some examples of the type of credit union insurance policies a credit union should invest in. The amount of coverage needed will vary and are dependent on the specifics of each individual credit union.
Federal Credit Union's Risks & Exposures
Premises liability exposure comes from slips and falls due to public access to the premises. As customer safety and security are very important, the credit union may have one or more armed security guards on duty while it is open. All employees must be trained in proper procedures during a holdup to minimize the possibility of violence to or kidnap of customers. Floors, stairs, and elevators need to be in good condition, with steps and uneven floor surfaces prominently marked.
The number of exits must be sufficient and well-marked, with backup lighting in the event of a power failure. Steps should have handrails, be well-lighted, marked, and in good repair. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls. There should be security in the parking lot equal to or better than the surrounding area. If the business is open after dark, such as for access to ATM machines or deposit boxes, lighting must be adequate.
Personal injury exposure arises from breaches of customers' privacy and confidentiality of their financial records, discrimination in lending practices, and for allegations of assault and battery during the apprehension of suspected robbers. The use of closed-circuit camera systems prevents such incidents from evolving into a "he said / she said" situation. Employees must be trained to handle such situations properly.
Product liability exposure is very low as financial products sold to customers are intangible. There may be some minor exposure if the credit union sells items like tee shirts or advertising novelties or offers small gifts to customers as a reward for doing business with them.
Directors and officers exposure may be limited if the credit union is small and run by members. If operations are larger and operate more like a bank, the exposure increases as directors and officers are more likely to be sued for results of their decisions in times of economic downturn. Credit unions may offer investment advisory services, estate handling, management of individual and corporate trusts, employee pension funds, escrow fund gathering and other financial activities. Directors and officers can be sued if funds from any of these are mismanaged.
Errors and omissions exposure by accountants and auditors can cause significant loss. There must be checks and balances in place to quickly catch and fix errors that are made. The background and training of all professional-level employees must be thorough and continual to keep up-to-date with industry changes. Monitoring is necessary.
Workers compensation exposures are moderate due to the possibility of injury or death of guards, tellers, and managers during an armed robbery. Tellers should be separated from customers by barriers such as high counters. Those working with customers at walk-up or drive-in windows should be protected by bulletproof glass enclosures. As most work is done on computers, employees are exposed to eyestrain, neck strain, and repetitive motion injuries including and carpal tunnel syndrome. All workstations should be ergonomically designed to reduce the chance of such injuries.
Property exposures are primarily from fire due to the electrical wiring for computers, printers and other electronic office equipment, heating, and air conditioning systems. All wiring must meet current codes, be well maintained, and be adequate for the credit union's operations. Circuitry for electronic equipment may be easily damaged from smoke, water, and heat, which will result in a total loss even with a small fire.
The building and its contents can be damaged during burglaries, robberies, and vandalism. Appropriate security measures should be taken, including physical barriers to prevent entrance to the premises after hours and an alarm system that reports directly to a central station or the police department. Since regulations require that customers have access to their monies on deposit at all times, disaster planning for potential interruptions is vital. Extra expense coverage should be considered as the credit union must continue operations after a loss.
Crime exposures are primarily from employee dishonesty, either from the theft of cash or from the improper transfer of funds held for customers. Money and securities can be stolen during armed robbery and safe burglary. Credit unions need a Financial Institutions Bond to cover these exposures. Background checks should be conducted for anyone who will have access to the accounts.
There must be regular monitoring and auditing of the books by outside auditors to prevent and identify problems. All employees must take at least one continuous week of vacation a year. Safes, vaults, theft-proof cashier cages, guards, and watchpersons are needed to protect money. Tellers' drawers should be stripped regularly and money moved to the vault. Bank drops should be made throughout the day to prevent a large buildup of cash available to thieves.
Controls and programming to prevent computer fraud should be reviewed. Extortion is a growing concern due to the high value of assets held by credit unions.
Inland marine exposure is from accounts receivable for billings to customers, computers for tracking financial data, and valuable papers and records for customers' and regulatory information. Off-premises coverage should be considered for kiosks and self-standing cash machines in other stores. Duplicates of all data should be made and maintained and stored at a separate location for ease of restoration in the event of a loss.
Business auto exposures may be limited to hired and non-owned exposure for employees running errands. If the company provides vehicles to officers or key employees, policies should be in place for personal and permitted use of the vehicles. Any driver must have a valid driver's license and acceptable MVR. Vehicles must be well maintained with records kept in a central location.
Commercial Insurance And Business Industry Classification
- SIC CODE: 6019 Central Reserve Depository Institutions, Not Elsewhere Classified, 6061 Credit Unions, Federally Chartered, 6062: Credit Unions, Not Federally Chartered
- NAICS CODE: 522130 Credit Unions
- Suggested ISO General Liability Code(s): 61123
- Suggested Workers Compensation Code(s): 8810, 8742
6019: Central Reserve Depository Institutions, Not Elsewhere Classified
Division H: Finance, Insurance, And Real Estate | Major Group 60: Depository Institutions | Industry Group 601: Central Reserve Depository Institutions
6019 Central Reserve Depository Institutions, Not Elsewhere Classified: Central reserve depository institutions, other than Federal Reserve banks, primarily engaged in providing credit to and holding deposits and reserves for their members, such as savings banks, savings and loan associations, or credit unions.
- Central liquidity facility
- Federal Home Loan Banks
- National Credit Union Administration (NCUA)
6061: Credit Unions, Federally Chartered
Division H: Finance, Insurance, And Real Estate | Major Group 60: Depository Institutions | Industry Group 606: Credit Unions
6061 Credit Unions, Federally Chartered: Cooperative thrift and loan associations (accepting deposits) organized under Federal charter to finance credit needs of their members.
- Federal credit unions
6062: Credit Unions, Not Federally Chartered
Division H: Finance, Insurance, And Real Estate | Major Group 60: Depository Institutions | Industry Group 606: Credit Unions
6062 Credit Unions, Not Federally Chartered: Cooperative thrift and loan associations (accepting deposits) organized under other than Federal charter to finance credit needs of their members
- State credit unions, not federally chartered
Credit Union Insurance - The Bottom Line
To learn more about what type of credit union insurance you should carry and how much coverage you should have, speak with a trusted insurance broker.
Types Of Small Business Insurance - Requirements & Regulations
Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.
Operating a business is challenging enough without having to worry about suffering a significant financial loss due to unforeseen and unplanned circumstances. Small business insurance can protect your company from some of the more common losses experienced by business owners, such as property damage, business interruption, theft, liability, and employee injury.
Purchasing the appropriate commercial insurance coverage can make the difference between going out of business after a loss or recovering with minimal business interruption and financial impairment to your company's operations.
Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.
Small Business Insurance Information
In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.
The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.
Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.
According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.
Types Of Small Business Insurance
Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:
- What type of business am I running?
- What are common risks associated with this industry?
- Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
- Does my state require me to carry this type of insurance?
- Does my lender or do any of my investors require me to carry this type of policy?
A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:
|Business Insurance Policy Type||What Is Covered?|
|General Liability Insurance||What is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.|
|Workers Compensation Insurance||What is covered under workers compensation insurance? This type of insurance protects a business and its owner(s) from claims by employees who suffer a work-related injury, illness or disease. Workers comp typically provides the injured employee with benefits to cover medical expenses, a portion of his/her lost wages, rehabilitation costs if applicable, and permanent partial or permanent total disability.|
|Product Liability Insurance||What is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.|
|Commercial Property Insurance||What is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.|
|Business Owners Policy (BOP)||What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.|
|Commercial Auto Insurance||What is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.|
|Commercial Umbrella Policies||What is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.|
|Liquor Liability Insurance||What is covered under liquor liability insurance? It covers bodily injury or property damage caused by an intoxicated person who was served liquor by the policy holder.|
|Professional Liability (Errors & Omissions)||What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.|
|Surety Bond||What is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).|
Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.
Business Insurance Required by Law
If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.
Your insurance agent can help you check applicable state laws so you can bring your business into compliance.
Other Types Of Small Business Insurance
There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:
- Business Interruption Insurance
- Commercial Flood Insurance
- Contractor's Insurance
- Cyber Liability
- Data Breach
- Directors and Officers
- Employment Practices Liability
- Environmental or Pollution Liability
- Management Liability
- Sexual Misconduct Liability
Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.
Also learn about small business insurance requirements for general liability, business property, commercial auto & workers compensation including small business commercial insurance costs. Call us (855) 767-7828.
Additional Resources For Non-Profit Insurance
Find useful articles on business insurance for non-profit 501(c)(3) organizations, charities and associations.
- Animal Shelter & Pet Rescue
- Classic & Collector Car Clubs
- Credit Union
- Fraternal Organization
- Goodwill Insustries
- Labor Union
- Parent Teacher Organization
- Public Administration
- Red Cross Chapters
- Salvation Army
- Social Work Services
- Veterans Groups
- Volunteers of America
- Youth Groups
For 501(c) Non-Profits - Directors And Officers Liability Insurance has become an increasingly important policy to have. D&O coverage protects insured directors or officers against claims involving allegations of wrongful acts occurring while performing their duties as such. The insurance is divided into two separate coverages:
Side A coverage reimburses the individual directors and officers for payments made for loss each has incurred because of wrongful acts.
Side B coverage reimburses the corporation for the payments it has made on behalf of the directors or officers themselves.
General Liability is a foundational policy for almost any business. Most companies do not have any control over the final cost of injuries to a person injured because of their operations, products, or services. The person injured may be a young child, a blue-collar worker, a surgeon, or a homeless person.
The cost of the injuries may be comparatively minor or run into the millions of dollars, depending on the person and the extent of his or her injuries. Do you have sufficient assets to pay such a loss?
Commercial general liability insurance is designed to help you protect your assets with three main coverages:
- Coverage A: Bodily Injury and Property Damage Liability
- Coverage B: Personal and Advertising Injury Liability
- Coverage C: Medical Payments
Minimum recommended small business insurance coverage: Building, Business Personal Property, Business Income and Extra Expense, Employee Dishonesty, Money and Securities, Computers, Valuable Papers and Records, General Liability, Directors and Officers Liability, Employee Benefits, Professional, Umbrella, Hired and Non-owned Auto & Workers Compensation.
Other commercial insurance policies to consider: Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Fine Arts, Musical Instruments, Commercial Articles Floater, Computers, Cyber Liability, Employment-related Practices, Business Auto Liability and Physical Damage and Stop Gap Liability.