The Specialty Financial Institutions And Services Insurance Guide
Financial Institutions And Services Insurance. This guide provides information on excess, surplus and specialty lines small business insurance policies and risks.
Here you can find basic descriptions of the specific industry risks or specialty coverage types available for Financial Institutions And Services Insurance.
For certain types of small businesses, particularly new ones - it is often very hard to know what types of commercial insurance is needed, what the risks are that should be covered - and where to find coverage.
We wanted to provide reference for specialty commercial insurance to help our readers get a better understanding of Financial Institutions And Services Insurance policies they might need to do business.
Learn about Specialty Financial Institutions And Services Insurance to better understand common risks, exposures and the types of commercial insurance coverage available to protect your small business and it's operations.
Financial Institutions And Services Insurance Types
Click on the links below to learn more about Specialty Financial Institutions And Services Insurance types and coverages:
- Armored Car Services Insurance
- Automobile Repossessors Liability Insurance
- Bankers Blanket Bond Insurance
- Check Cashing Services Insurance
- Collateral Protection Insurance
- Courier And Messenger Services Insurance
- Directors And Officers Liability Insurance
- Electronic Data Processing Equipment Insurance
- Equity Protection Plan
- Escrow Agents Errors And Omissions Insurance
- Excess FDIC Insurance
- Excess Fidelity Bonds
- Financial Institutions Insurance
- Forced-Placed Foreclosure Property Insurance
- IRA Or Keogh Plan Errors And Omissions Insurance
- Lenders Environmental Liability Insurance
- Mortgage Bankers And Servicing Agents Errors And Omissions Insurance
- Mortgage Brokers Errors And Omissions Insurance
- Mortgage Impairment Insurance
- Mutual Fund Managers Errors And Omissions Insurance
- Mutual Funds Directors And Officers Insurance
- Pension Consultants Insurance
- Premium Finance Companies Errors And Omissions Insurance
- Privacy Insurance
- Registered Representatives Errors And Omissions Insurance
- Representations And Warranties Insurance
- Single Interest Insurance
- Stockbrokers Errors And Omissions Insurance
- Trust Department Errors And Omissions Insurance
- Trustees And Fiduciaries Errors And Omissions Insurance
What Type Of Insurance Do Armored Car Services Need?
Insurance coverage on armored car services is difficult to place because of the hazardous nature of their operations and the services provided. Pick-up and delivery of money and securities, gold bullion, and other precious metals and valuables expose both the vehicle and its drivers and attendants to significant losses. The cargo that armored car services carry is valuable and difficult to underwrite and insure.
What Is Automobile Repossessors Liability Insurance?
Businesses that repossess automobiles have difficult liability exposures and require expert handling. General liability, especially personal and advertising injury liability, is required to cover the operations exposure. In addition, auto liability for tow truck operations is required. Drive-away coverage is needed to cover the liability exposure on the vehicle being repossessed and garagekeepers legal liability is needed to cover vehicles while in the insured's care, custody, and control.
What Is A Bankers Blanket Bond?
The Excess Bank Employee Dishonesty Bond provides high limits bankers blanket bond coverage. This bond is written over Financial Institution Bond-Standard Form No. 24's underlying limits. The excess bond protects banks against catastrophic employee dishonesty losses. The standardized excess blanket bond is Excess Bank Employee Dishonesty Bond-Standard Form No. 28. There is no specific formula to determine adequate limits for a given financial institution, but one guideline used is average deposits value.
What Type Of Insurance Do Check Cashing Services Need?
This coverage is designed for individual check cashing service businesses or for businesses that provide such services as a part of a larger operation. Losses due to employee dishonesty, loss inside or outside the premises, and forgery are covered. When the check cashing service is part of another business, coverage applies to only the check cashing exposure.
What Is Collateral Protection Insurance?
Financial institutions involved in credit transactions may be exposed to heavy losses due to uninsured collateral. The cost to enforce insurance provisions and the number of repossessions caused by uninsured collateral has created the need for this coverage. Collateral protection insurance covers physical damage to collateral held by the lender. When the borrower breaches its contract and does not insure the collateral as it agreed to in the contract, this coverage is activated and the price of the insurance is added to the borrower's monthly payment. This coverage protects only the lender's interest. Autos, pickup trucks, vans, motorcycles, campers, motor homes, travel trailers, and boats are examples of property that this insurance covers.
What Type Of Insurance Do Courier And Messenger Services Need?
Courier and messenger services present significant automobile-related exposures because their vehicles operate almost nonstop in urban areas during normal working hours. In addition to auto exposures, couriers and messengers may also use bicycles, skates, or other means on sidewalks that create workers compensation and general liability-related exposures. Each risk must be considered carefully and cautiously. Premiums and deductibles depend on the operation's size, the area served, and the type of vehicles used. Older vehicles are usually subject to mandatory inspections.
What Is Directors And Officers Liability Insurance?
This coverage protects directors and officers of a corporation against claims that allege injury caused by their negligent acts, errors, or omissions while acting in their corporate capacities. It also indemnifies corporations for expenses they incur to defend such lawsuits. The market for this coverage is expanding and addresses all sizes of corporations. Some companies cover discrimination, wrongful termination, and sexual harassment. Financial institutions are one of the most difficult classes of directors and officers liability to insure because they are subject to significant regulatory and civil actions against their directors and officers.
What Is Electronic Data Processing Equipment Insurance?
This coverage insures direct physical loss or damage to electronic data processing system equipment and media including the introduction of viruses and damage by hackers. It also covers the extra expenses incurred to continue operations after the equipment or media is damaged. Business income coverage if the insured's operations are partially or completely suspended due to damage to data processing equipment or media may also be provided. These coverages are usually written on an all risks type or special causes of loss basis. Most companies offer limited breakdown coverage.
What Is An Equity Protection Plan?
This product is not insurance. It is a contract against the loss of home equity based on measurements of general declines in home values in designated areas. Home sellers can purchase equity protection for the home buyer's benefit as an additional buyer incentive. Current homeowners can purchase it as a protection against possible declines. These plans are usually subject to a set number of months of ownership (waiting period) that must pass following purchase of the plan before a claim can be made. The value of the individual home is not considered in determining if a loss has occurred. Instead, any equity protection payout is based on the general market decline in the area where the home is located. The equity protection payout is made only when the home is sold.
What Is Escrow Agents Errors And Omissions Insurance?
This coverage pays for damages that arise from escrow agents' negligent acts, errors, or omissions. Banks, mortgage service companies, savings and loan associations, and title companies are examples of businesses that provide escrow services and therefore need this coverage. Deeds, property taxes, and property insurance premiums are examples of items that are held in escrow. The market for this coverage is limited.
What Is Excess FDIC Insurance?
The Federal Deposit Insurance Corporation (FDIC) insures bank deposits up to certain maximum limits per account. A limited number of carriers insure deposits for amounts that exceed this maximum in the event that a financial institution's bankruptcy causes the depositor financial loss that exceeds the FDIC guarantee.
What Are Excess Fidelity Bonds?
Excess fidelity bonds may be written for financial institutions or other commercial entities as excess over a deductible amount or as specific excess. Many large banks or commercial entities regularly require large fidelity coverage limits, especially in situations where there is a significant exposure to money or other negotiable instruments.
What Type Of Insurance Do Financial Institutions Need?
Financial institutions' theft and trust exposures are significant and require underwriting specialists to analyze and insure them. Banks, savings and loan associations, mortgage bankers, and other financial institutions' exposures are based on their balance sheets, services offered, contractual obligations, and regulatory compliance. The exposures must be analyzed thoroughly to determine the exposures that must be insured and the ones that can be minimized or self-insured. By using deductibles, large cash and securities exposures can be covered more efficiently and proper attention paid to the truly catastrophic exposures. Some of the more important specialized coverages include financial institution bonds, errors and omissions coverage for trust department operations, lenders' single interest coverage on auto and vehicle loans, mortgage errors and omissions, and financial consultants' errors and omissions coverages. Directors and officers' liability coverage must also be considered.
What Is Forced-Placed Foreclosure Property Insurance?
This service is available to financial institutions to automatically provide coverage for mortgaged properties on which the borrowers are required to carry property insurance but have failed to meet the obligation. The cost of the insurance is added to the monthly obligations that borrower has to the financial institution. The financial institution has automatic binding authority.
What Is IRA Or Keogh Plan Errors And Omissions Insurance?
This coverage is written on a claims-made basis. It protects an IRA or Keogh plan administrator, often a bank or association, against claims that arise from alleged mishandling of the plan's accounts. It covers defense costs and reimburses reasonable expenses and attorney's fees incurred by officers or directors.
What Is Lenders Environmental Liability Insurance?
Financial institutions are increasingly concerned about their potential liability for cleaning up property if it is determined that the property on which they have made loans is contaminated by hazardous waste. Insurance coverage is available to protect real estate owners and lenders from government, state, and court mandated cleanup of contamination that is present but that was not detected when the property was purchased. Coverage also applies to costs associated with remedial investigation and feasibility studies, as well as defense costs that result from liability. It is sometimes known as secured creditor environmental exposure coverage.
What Is Mortgage Bankers And Servicing Agents Errors And Omissions Insurance?
This coverage protects against losses from any claim against the insured for alleged negligent acts, errors, or omissions committed in originating, financing, closing, selling, or servicing mortgage loans on real estate or providing advice for any of these.
What Is Mortgage Brokers Errors And Omissions Insurance?
Mortgage brokers place mortgages for realtors who sell homes and commercial risks. The brokers arrange the financial papers and place the loan with secondary money markets or financial institutions. Unlike mortgage bankers, they do not handle the loan once it is placed. Mortgage brokers are the intermediaries between purchasers of the property and the lenders. Errors and omissions coverage protects the broker against loss from any claim for any alleged negligent act, error or omission in placing a mortgage.
What Is Mortgage Impairment Insurance?
This coverage protects banks and other financial institutions for their mortgagee interests on property owned by mortgagors that have secured loans from them. Because the mortgagor is required to carry first-party coverage on the mortgaged property, this insurance is secondary and protects the interest of only the mortgagee. It may also cover a broader range of perils including flood, wave wash, collapse or subsidence, and earthquake. A variety of options are available and limits available can be substantial. It is usually written subject to a deductible.
What Is Mutual Fund Managers Errors And Omissions Insurance?
Mutual funds permit smaller shareholders to invest in a number of stock portfolios instead of investing in individual firms. Fund managers have an important fiduciary responsibility to fund shareholders. Coverage for errors and omissions in administering the fund insures the fund itself, as well as individual managers, officers, and directors.
What Is Mutual Funds Directors And Officers Insurance?
Coverage is available for these exposures of mutual fund managers and investment advisers, mutual funds only, mutual funds and investment advisors, or investment advisors only. A combined package of coverages provides full directors and officers and full errors and omissions coverages on a claims-made basis. An optional extension period may be purchased if the insurer cancels or nonrenews.
What Type Of Insurance Do Pension Consultants Need?
Pension consultants are professionals who work with employers to formulate, implement, administer, and maintain qualified retirement plans and other employee benefits programs. They often work with actuaries to provide complete services to both employers and employees. The type of services provided determines the risk's acceptability and the premium to charge.
What Is Premium Finance Companies Errors And Omissions Insurance?
Premium finance companies provide flexibility for insurance agents and their clients. However, a premium finance company's negligence can result in a substantial loss, especially if the insurance company cancels a policy for nonpayment of premium and a loss occurs during the lapsed time. Errors and omissions coverage pays defense costs and damages when allegations of errors or omissions are made against the premium finance company. The premium charged is based on the number of policies financed. Deductibles may be used in some cases.
What Is Privacy Insurance?
This coverage protects the insured when confidential information belonging to clients, employees or vendors is breached because of an alleged error on the insured's part. Coverage is provided for both defense and indemnification. Coverage also includes the cost to notify affected individuals.
What Is Registered Representatives Errors And Omissions Insurance?
This coverage insures registered representatives of brokers/dealers against claims brought against them for financial losses caused by their alleged negligent acts, errors, or omissions when they sell mutual funds or variable annuities. Registered representatives are persons registered with the Financial Industry Regulatory Authority (FINRA) who are licensed by the appropriate state securities regulatory agency. Licensed property and casualty or life insurance agents and brokers who also have facilities to sell mutual funds and variable annuities to their clients need this in addition to their insurance agents' errors and omissions policies because of exclusions.
What Is Representations And Warranties Insurance Coverage?
The merger with or acquisition is always based on trust. The buyer expects that all information provided and statements made are true. Unfortunately, miscommunication can occur. Representation and warranties coverage is available to both the buyer and the seller to help the acquisition process run smoothly. It is often used in lieu of an escrow of proceeds following a sale. Substantial deductibles may apply to both the buyer and the seller in order to encourage that information is accurate and that best practices are engaged.
What Is Single Interest Insurance?
This coverage protects financial institutions, such as banks, savings and loans, finance companies, and credit unions against financial loss that results from physical damage to property on which they have made loans. Coverage applies only if the borrower does not have the required physical damage insurance. It is also known as force-placed coverage. Examples of the types of property covered are autos, pickup trucks and vans, recreational vehicles, watercraft, mobile homes, motorcycles, farm equipment, and household goods. Coverage is written on a blanket basis where the insured reports the number of outstanding loans and loan volume each month. The amount that may be recovered may not exceed the amount owed on the property at the time of the claim.
What Is Stockbrokers Errors And Omissions Insurance?
This professional liability coverage indemnifies the insured stockbroker or stock brokerage firm for claims made against it during the policy period. The claims must arise from alleged negligent acts, errors, or omissions in the insured's capacity as a stockbroker in the purchase or sale of securities on accounts of its customers. Coverage is available on either a per-claim/annual aggregate basis or on a single-limit annual aggregate. It is subject to a minimum deductible, usually based on the stock brokerage firm's size.
What Is Trust Department Errors And Omissions Insurance?
This is insurance coverage for bank trust departments against claims for damages due to an alleged breach of duty in administering estates or trusts or in managing real or personal property. Coverage applies only if the breach is caused by a negligent act, error, or omission within the scope of the trust department's duties. These duties include giving financial, economic, or investment advice or rendering investment advisory or managing service to clients.
What Is Trustees And Fiduciaries Errors And Omissions Insurance?
Passage of the Employee Retirement Income Security Act of 1974 (ERISA) brought about one of the most significant changes in the insurance business. In addition to providing guidelines for the federal government to regulate private pension plans, it also greatly broadened the responsibilities of trustees and fiduciaries who directly or indirectly exercise control over pensions or employee benefits that fall under the act. Certain provisions of the act established new standards for prudent action by fiduciaries. The act permits purchasing insurance to protect the personal liability of trustees or fiduciaries for their negligent acts, errors, or omissions. This insurance may be purchased using assets of the plan or trust to protect the plan and its fiduciaries as long as the insurer has recourse against the individual trustee.
Financial Institutions And Services Insurance - The Bottom Line
We hope that the Financial Institutions And Services Insurance helps you to better understand the some of the specialty small business commercial insurance policies available for your business. To find out what types of coverage your unique business needs, speak to a professional commercial broker with experience in insuring businesses like yours.
Specialty Small Business Insurance Guide By Industry, Risk Or Policy Type
- Accident And Sickness / AD&D
- Aircraft And Airports
- Amusement Parks And Rides
- Animals And Birds
- Arts And Antiques
- Auctions And Farmers Markets
- Automobiles, Trucks And Recreational Vehicles
- Business Risks
- Clubs And Leisure Time Activities
- Community Service Organizations
- Dealers And Distributors
- Directors And Officers Liability
- Drugs And Alcohol
- Employee Protection
- Environmental Risks
- Errors And Omissions
- Farm Risks
- Financial Institutions And Services
- Firearm And Shooting
- Food And Restaurants
- Hazardous Materials
- Health Risks
- Hotels And Motels
- Inland Marine
- Insurance Services
- Machinery And Tools
- Medical Centers And Clinics
- Medical Malpractice
- Mobile And Modular Homes
- Motorcycle Risks
- Natural Disasters
- Nonprofit Agencies
- Oil And Chemical
- Physical Damage
- Prize Indemnification
- Product Liability
- Real Estate
- Retail Stores
- Schools And Education
- Security Risks And Equipment
- Service Businesses
- Sports And Hobbies
- Substandard Risks
- Weather Related
- Workers Comp
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.