Company insurance is intended to safeguard the financial assets of a business owner and is a crucial investment for a bank.
This article will discuss the primary insurance coverage for banks, general liability insurance, as well as additional policies that are appropriate for this industry.
Table of Contents
Banks’ General Liability Insurance
Every firm, regardless of sector, has risks that should be insured. General liability insurance is the most frequent and comprehensive form of coverage that company owners purchase.
General liability insurance covers the following risks:
Physical harm
Damage to property
Medical expenses
Legal defence and decision
Personal and commercial harm
While general liability insurance is not legally needed for companies, operating without it is exceedingly dangerous. If your company is sued, you might face costs in the hundreds of thousands of dollars (or more). The only way to avoid this sort of catastrophe from destroying your organisation is to have an adequate general liability insurance coverage in place to assist pay for these losses.
COMMON SITUATIONS THAT A BANK’S GENERAL LIABILITY INSURANCE MAY COVER
Example 1: On a rainy day, a customer enters the bank and slips on a spot of wet floor that lacks a warning sign. Any ensuing injuries should be covered by general liability insurance.
Example 2: A client is accused of stealing after an employee miscalculates the amount of money they stole. General liability insurance should cover your legal defence in the event that a consumer brings slander claims against you.
Example 3: You make an error in your promotional materials, and a consumer sues you for financial damage caused by the wrong information. General liability would assist with covering the customer’s damages as well as your legal expenditures in fighting their claim in court.
Of course, this is not an entire list of risks covered by a general liability insurance policy, and certain situations may result in a specific peril not being covered. To minimise coverage gaps, it’s always better to speak with your agent about the terms of your policy.
General Liability Insurance Cost
Banks in the United States pay an average of $400 to $700 per year for $1 million in general liability coverage.
The cost of your coverage will be determined by a number of variables. Among them are your:
Location
Deductible
Employees’ number
Per-occurrence restriction
The overall aggregate limit
You may be able to get general liability insurance at a lower cost if you buy it as part of a business owner’s policy (BOP) rather than as a separate policy. A business interruption policy (BOP) is a more complete option that covers numerous types of coverage, such as business interruption and property insurance.
Other Types of Coverage Required by Banks
While general liability insurance is the most crucial, there are various different types of coverage to be aware of. Other forms of insurance that all banks should have are as follows:
Insurance for Commercial Property
Commercial property insurance covers the structure in which you operate, the grounds on which you operate, and the business-related equipment you keep on the premises. If your facility is damaged by a fire or a large storm, commercial property insurance will cover the expense of restoring it as well as replacing lost equipment and other company items, allowing you to recover fast.
Insurance for Workers’ Compensation
Workers’ compensation insurance is required in most states for both part-time and full-time employees. This coverage covers your workers if they are hurt at work or get sick as a result of a workplace accident. It covers not just an employee’s medical expenditures and missed pay if they need time off to recuperate, but also any disability or death benefits resulting from a work-related accident.
Insurance for Professional Liability
Professional liability insurance safeguards your personnel in the event that they make a mistake on the job. If one of your financial advisers fails to tell a client of a seldom used condition on an annuity contract, for example, this coverage would most likely cover any losses incurred by the customer as a result of carelessness.
Insurance for Data Breach
Banks attract prospective hackers and cyber criminals. If your company loses sensitive information as a consequence of a data breach, this coverage will assist pay for the restoration of your computer network as well as compensation to consumers for any resulting financial losses.
Insurance for Commercial Crime
Given the quantity of cash in banks, commercial crime insurance protects your company against both employee and outsider theft. Because a single large incident might result in significant financial loss, having as much protection as possible is beneficial.
Coverage Options for Some Banks
In addition to the policies listed above, your bank may need other forms of coverage based on particular elements of its business. Some of them may not apply to you, so be sure to ask your agent whether policies are appropriate for your company.
Umbrella Insurance for Businesses
While most claims are covered by your general liability insurance policy, certain incidents or lawsuits may be so severe that they threaten to deplete the limits of your main coverage. Commercial umbrella insurance protects you from having to pay for legal expenses and awarded damages that exceed the limits of your main policy out of pocket.
Additional Security Measures for Your Company
Although investing in company insurance is simple (and necessary), it should not be your first line of defence. Yes, insurance will reimburse your company for cash losses incurred as a result of an occurrence, but it is much preferable to avoid losses altogether.
With this in mind, here are a few steps you can take to better secure your company:
Make use of legally binding contracts and other business agreements. (We provide free templates for several of the most often used legal forms.)
To safeguard your personal assets, form a limited liability company (LLC) or a corporation. (To discover how to incorporate an LLC or company in your state, see our step-by-step tutorials.)
Keep your company licences up to date.
Streamline the internal procedures of your company. This will eliminate unneeded variables from routine activities and establish a secure, consistent environment in which to do business.
If your company is an LLC, you should check into LLC insurance.