Insurance For Banks

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Insurance For Banks Policy Information

Insurance For Banks

Insurance For Banks. Local bank branches are important client-facing contact points that can, in some ways, be said to represent the heart of a bank. The face to face services offered within each bank branch will typically include tellers, financial advisors, mortgage officers, and loan officers.

Banks are financial institutions that accept monetary deposits from customers and use those funds to make loans to others. Customers who deposit money have ongoing access to those funds through ATMs, checks, or electronic means. They have the right to close their account at any time, withdraw their money or transfer it to another financial institution.

Banks earn income from interest charged on loans, profits from investments, and transaction fees. The bank may offer financial planning, investment services, or sell insurance.

To maintain public confidence in the industry, banking is highly regulated at the federal and state level. The regulations change frequently so additional operations may be added as permitted.

Even as banking is increasingly moving into digital spaces for most consumers, local bank branches continue to perform several vital functions. Not only can clients get friendly in-person advice or services or withdraw and deposit physical cash, local branch branches also raise the bank's overall profile - reminding every passer-by that this bank is a trusted part of their community every time they spot the logo.

While banks have numerous security systems in place to keep their assets protected and these businesses must also carefully analyze the current market and the risks they face on an ongoing basis, the fact remains that uncertainty remains a key part of doing business.

Carrying adequate insurance for banks may not be able to save a branch from every unwelcome eventuality, but it is nonetheless a key part of risk management. What kinds of insurance should banks equip themselves with? Learn more here.

Insurance for banks protects financial institutions from lawsuits with rates as low as $57/mo. Get a fast quote and your certificate of insurance now.

Below are some answers to commonly asked banking insurance questions:


How Much Does Banks Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small banks ranges from $57 to $79 per month based on location(s), size, revenue, claims history and more.


Why Do Banks Need Insurance?

Bank Business Insurance

As well as facing some of the same risks that would be familiar to people operating in any business sector, banks also face a myriad of others.

Credit risk is associated with the possibility that private individuals and commercial ventures alike will default on small and large loans. The constant fluctuations of the market represent another huge risk.

Operational risk is another enormous concern, and this covers anything from large-scale, devastating, cyber security breaches to fraud and other forms of crime, or even honest mistakes, such as an employee accidentally giving out the wrong amount of money.

In addition, local bank branches are subject to the same perils that could affect any commercial operation. Acts of nature, like wildfires or earthquakes, could devastate the building. Employees could be injured on the premises or suffer from psychological burnout. Customers could sue after accidents in which they are hurt.

To protect themselves from the financial fallout of these and countless other perils, banks, like any other business, need to carry the insurance for banks that will help them minimize the damage of any mishap or disaster.


What Type Of Insurance Do Banks Need?

Each business has a unique risk profile. As such, each business needs and deserves insurance that is tailor-made for them. Factors that include the bank branch's size and location, the services it offers, the value of the assets present onsite, and its number of employees all influence both the types of coverage required and the exact nature of the policies that will best meet that bank's insurance needs.

Because of that, it is essential to engage a skilled commercial insurance broker who is deeply familiar with the banking industry. To get a closer look at what that might include, these are some of the core kinds of insurance for banks needed:

  • Commercial Property: Like other business, bank branches need to protect themselves from the devastating financial consequences that would, without insurance, arise from property loss or damage when perils like fire, theft, vandalism, and acts of nature occur. Commercial property insurance covers the commercial building as well as smaller assets inside, such as security systems, office furniture, and computers.
  • General Liability: This type of insurance for banks coverage is essential for any business, as it minimizes the cost of third party property damage and liability claims, which can occur when a person or their property is negatively affected at the facility or as a result of the bank's actions. Attorney fees, settlement costs, and other legal expenses can all be covered.
  • Errors And Omissions: Also referred to as professional liability insurance, this kind of coverage helps manage the legal expenses associated with allegations that the bank's work was negligent, inadequate, or intentionally harmful.
  • Workers Compensation: Bank employees may physically be injured on the job, but they may also require sick leave if they become mentally distressed, for instance after a robbery. Workers comp insurance covers injured employees' medical costs and takes care of any wages they lose to related absences from work.

Due to the fact that local bank branches have complex insurance needs, these types of insurance for banks coverage are merely examples of those needed.

Other, specialized, types of insurance a bank should carry are management liability, fiduciary liability, and cyber liability policies, along with kidnap and ransom coverage. Commercial auto insurance will also almost certainly be needed.

For further information, a commercial insurance broker will be able to assist.


Banking's Risks & Exposures

Bank Building

Premises liability exposure comes from slips and falls due to public access to the premises. As customer safety and security are very important, the bank 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 bank sells items like tee shirts or advertising novelties or offers small gifts to customers as a reward for banking with them.

Directors' and Officers' exposure can be substantial due to competing priorities of numerous stakeholders such as bondholders, depositors, employees, regulators, and stockholders. Directors and officers are more likely to be sued for results of their decisions in times of economic downturn and well-publicized excesses within the financial services industry.

Banks may offer investment advisory services, estate handling, management of individual and corporate trusts, employee pension funds, escrow funds and other financial activities. Directors and officers can be sued if funds from any of these are mismanaged. Officers must be thoroughly knowledgeable about the banking business, able to operate competitively while maintaining profitability, and able to oversee ongoing operations effectively.

Directors should include representation from a wide variety of business interests with no conflicts of interest.

Fiduciary liability exposure is high because banks often act as trustees for clients. Appropriate surety bonds should be in place along with a fiduciary liability policy for potential errors and omissions.

Professional liability 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 to 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 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 bank's operations.

Circuitry for electronic equipment may be easily damaged from smoke, water, and heat, which will cause a total loss even with a small fire. The building and its contents can be damaged during robberies, burglaries, 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 bank 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. Banks 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, watchpersons, and alarms are needed to protect money. Tellers' drawers should be stripped regularly, and money moved to the vault 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 banks.

Inland marine exposure comes from accounts receivable from billings to customers, computers for tracking deposits, withdrawals, and investments, and valuable papers and records for customers' and regulatory information.

Fine arts coverage may be needed if there are paintings or statuary in key areas such as conference rooms or lobbies. Off-premises coverage should be considered for kiosks and self-standing cash machines in other stores.

There may be signs requiring more comprehensive coverage than available on property forms. Backup copies of all records, including computer records, should be made and stored off premises for ease of restoration in the event of a loss.

Business auto exposures may be limited to hired and non-owned 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: 6011 Federal Reserve Banks, 6021 National Commercial Banks, 6022 State Commercial Banks, State, 6029: Commercial Banks, Not Elsewhere Classified, 6035 Savings Institutions, Federally Chartered, 6036 Savings Institutions, Not Federally Chartered, 6111 Federal And Federally-Sponsored Credit Agencies
  • NAICS CODE: 522110 Commercial Banking, 522120 Savings Institutions, 522190 Other Depository Credit Intermediation
  • Suggested ISO General Liability Code(s): 61223
  • Suggested Workers Compensation Code(s): 8810, 8742

Description for 6011: Federal Reserve Banks

Division H: Finance, Insurance, And Real Estate | Major Group 60: Depository Institutions | Industry Group 601: Central Reserve Depository Institutions

6011 Federal Reserve Banks: The Federal Reserve banks and their branches, which serve as regional reserve and rediscount institutions for their member banks.

  • Federal Reserve banks
  • Federal Reserve branches

Description for 6021: National Commercial Banks

Division H: Finance, Insurance, And Real Estate | Major Group 60: Depository Institutions | Industry Group 602: Commercial Banks

6021 National Commercial Banks: Commercial banks and trust companies (accepting deposits) chartered under the National Bank Act. Trust companies engaged in fiduciary business, but not regularly engaged in deposit banking, are classified in Industry 6091.

  • Commercial banks, National
  • Trust companies (accepting deposits) commercial: National

Description for 6022: State Commercial Banks

Division H: Finance, Insurance, And Real Estate | Major Group 60: Depository Institutions | Industry Group 602: Commercial Banks

6022 State Commercial Banks: Commercial banks and trust companies (accepting deposits) chartered by one of the States or territories. Trust companies engaged in fiduciary business, but not regularly engaged in deposit banking, are classified in Industry 6091.

  • Commercial banks, State
  • Trust companies (accepting deposits) commercial: State

Description for 6029: Commercial Banks, Not Elsewhere Classified

Division H: Finance, Insurance, And Real Estate | Major Group 60: Depository Institutions | Industry Group 602: Commercial Banks

6029 Commercial Banks, Not Elsewhere Classified: Commercial banks (accepting deposits) which do not operate under Federal or State charter.

  • Commercial banks, not chartered

Description for 6035: Savings Institutions, Federally Chartered

Division H: Finance, Insurance, And Real Estate | Major Group 60: Depository Institutions | Industry Group 603: Savings Institutions

6035 Savings Institutions, Federally Chartered: Federally chartered savings institutions (accepting deposits) operating under Federal charter.

  • Federal savings and loan associations
  • Saving banks, Federal
  • Savings and loan associations, federally chartered

Description for 6036: Savings Institutions, Not Federally Chartered

Division H: Finance, Insurance, And Real Estate | Major Group 60: Depository Institutions | Industry Group 603: Savings Institutions

6036 Savings Institutions, Not Federally Chartered: State-chartered savings institutions (accepting deposits) which do not operate under Federal charter..

  • Savings and loan associations, not federally chartered
  • Savings banks, State: not federally chartered

Description for 6111: Federal And Federally-Sponsored Credit Agencies

Division H: Finance, Insurance, And Real Estate | Major Group 61: Non-depository Credit Institutions | Industry Group 611: Federal And Federally-sponsored Credit Agencies

6111 Federal And Federally-Sponsored Credit Agencies: Establishments of the Federal Government and federally-sponsored credit agencies primarily engaged in guaranteeing, insuring, or making loans. Federally-sponsored credit agencies are established under authority of Federal legislation, but are not regarded as part of the government. They are often owned by their members or borrowers.

  • Banks for cooperatives
  • Commodity Credit Corporation
  • Export-Import Bank
  • Farmers Home Administration
  • Federal Home Loan Mortgage Corporation
  • Federal Intermediate Credit Bank
  • Federal Land Banks
  • Federal National Mortgage Association
  • Government National Mortgage Association
  • National Consumer Cooperative Bank
  • Rural Electrification Administration
  • Student Loan Marketing Association
  • Synthetic Fuels Corporation

Insurance For Banks - The Bottom Line

To protect your bank, employees and customers, having the right insurance for banks coverage is vital. To learn what types of policy options are available to you, how much coverage you should invest in and the costs - speak to a reputable commercial 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.

Small Business Information

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 InsuranceWhat 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 InsuranceWhat 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 InsuranceWhat 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 InsuranceWhat 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 InsuranceWhat 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 PoliciesWhat 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 InsuranceWhat 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 BondWhat 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
Small Business Commercial Insurance

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 Financial Institutions Insurance

Discover the types of commercial insurance that banks, finance companies and other financial institutions need to protect their asset management, deposit, lending, investment and other operations.


Financial Institution Insurance

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.

Minimum recommended small business insurance coverage: Business Personal Property, Extra Expense, Equipment Breakdown, Financial Institutions Bond, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Directors' and Officers' Liability, Employee Benefits, Fiduciary Liability, Professional, Umbrella, Hired and Non-Owned Auto, Workers Compensation & Surety Bonds.

Other commercial insurance policies to consider: Buildings, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Computer Fraud, Extortion, Fine Arts, Signs, Cyber Liability, Employment-related Practices, Law Enforcement Professional, Business Auto Liability and Physical Damage And Stop Gap Liability.


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