Financial Institutions Insurance Helps Protect People’s Savings

Banks and other type of financial companies take in a lot of cash from individuals, families, commercial operations, charitable organizations and others, and they need insurance protection to ensure all who depend on them are not ruined in the event of some sort of drastic event.

Insurance companies, insurance agencies and commercial operations dealing with securities can handle a great deal of money over the course of a week, month or year, and they can be vulnerable to a wide variety of perils, not the least of which is an outright robbery or some form of electronic invasion and theft. Liability insurance coverage also is necessary for financial firms, as are a wide variety of other coverages for other perils.

Other types of financial institutions insurance coverage include employment practices liability plans, which can help protect against the legal costs and financial settlements from making improper hiring and employment decisions. Even when someone has not been hired, if they have a legitimate reason to file a lawsuit or lodge a complaint with the federal or state governments that result in hefty fines. Loss prevention services also can be compensated when the need arises to hire special help, such as an auditing firm, to ensure all records and financial transactions are in order. If a discrepancy is found, a great deal of cost might be needed to correct it over time, and a good insurance plan might help protect against that cost.

Fiduciary liability insurance also might be needed to protect against the potential loss of other people’s or parties’ cash, securities or other valuable financial information that could result in a steep loss. If even an insurance agent makes a mistake and neglects to forward an insurance payment on time and someone loses their insurance coverage just before suffering a significant loss that would have been covered, then a fiduciary insurance plan would help restore the loss in part or in whole.

Even threats to officers and directors also can be covered with bank and other institutions insurance. If an executive or a family member is kidnapped or blackmailed, coverage is available for kidnapping, ransom and extortion protection, depending on the insurance underwriter.

Among those needing financial institutions insurance coverages might be community banks, investment firms, credit unions, hedge funds, mutual funds, private equity firms and venture capital firms as well as property and casualty insurance companies and insurance agencies and brokerages. Life insurance firms and their agents and brokers also need financial institutions insurance coverage due to their abundant use of financial tools, such as investment-tied life insurance plans as well as annuities and other investment products.

Banks and other institutions are vulnerable to a wide variety of perils, necessitating a great deal of insurance coverages to handle them. Losing a client’s portfolio due to a freak occurrence, such as an electrical power surge, could be a disaster for a financial institution. But a good risk management plan with proper insurance coverage means that firm as well as its client likely would be protected against financial calamity and capable of maintaining their client’s confidence. By Mike Heuer