A banker could be sued for any number of reasons including, but not limited to, a breach of duty, making a misleading or incorrect statement, or other mistakes related to deposits, brokerage, insurance, real estate, credit card or other services they provide. For example, a customer faced with a fraudulent check or fraudulent wire transfer that caused funds to be erroneously removed from their account might consider this the basis for a lawsuit.
Bankers Insurance provides financial protection for financial professionals against a customer’s claim of negligence. Professional liability insurance for bankers is a type of errors and omissions coverage made to protect persons working in the banking industry, along with the institutions they work for, from any expenses associated with having to mount a defense against a lawsuit or having to pay a judgment when they lose.
When should bankers purchase coverage?
Bankers should purchase professional liability insurance policies as soon as possible. The policy can also be tailored to the unique risks they may face. In most cases, an investment banker would want coverage for underwriting, syndicating, securitizing and market-making activities. A lender, on the other hand, would want coverage for his or her activities related to granting, committing to, restructuring or terminating loans and lines of credit.
However, it’s important to understand that Bankers insurance for professional liability does not cover fraudulent or dishonest behavior, any deliberate violations of laws, or other criminal acts by individuals. It also does not cover claims that are pending at the time the policy is taken out, nor does it cover libel, slander, defamation or claims of invasion of privacy.
Some policies written by insurers may allow banks to choose their own legal defense should the need arise. In most cases, the insurance company will provide the legal defense when litigation stems from an insured act. If the insurance company comes to the conclusion that a settlement is preferable to a trial and the insured refuses the settlement, coverage for trial expenses may be limited to the proposed settlement amount.
It’s vital for you to read and understand any contract fully before committing to the coverage proposal. Speak to an agent if you have any questions pertaining to Bankers insurance.