What Is Civil Monetary Penalty Insurance?

What Is Civil Monetary Penalty Insurance?

As a result of investigations into potential wrongdoing by financial institutions, regulators may impose fines, called civil money penalties, on individuals within the institution. These fines can grow to be quite large and have a significant impact on the assets of the individual being penalized. The possibility of such a penalty is a risk that is taken by directors and officers of banks on a regular basis. It is possible to alleviate this risk, however, by taking out a civil money penalty liability insurance policy.

The way this kind of insurance policy works is similar to other types of insurance policies: The bank officer or director can customize his or her policy’s deductible and coverage limit. The decisions made about these factors will determine the cost of the annual premium for the policy. In the event that a penalty is levied against the policy holder, he or she can file a claim with the insurance company. The insurance company would then cover the cost of the fine, less the policy’s deductible, up to the coverage limit.

Taking out a civil money penalty liability insurance policy is a good way for board members of financial institutions to maintain a bit of peace of mind that they are covered in case they are held personally liable for a penalty.

Leave a Reply

Your email address will not be published. Required fields are marked *

eighteen − seventeen =