The Need for E&O Insurance
As the financial lifeblood for many communities across the country, individuals depend on your institution for a loan to purchase a home, start or expand a business and other financial matters. In fact, according to the Independent Community Bankers of America, community banks comprise 97% of all banks in the United States and hold more than half of all small business outstanding loans. With these transactions come exposures that could lead to devastating judgments and financial ruin. These include claims involving the mis-selling of financial products such as personal mortgages and business loans, allegations of discrimination regarding loan applicants, and claims relating to yield spread or subprime loans. In addition, as a local community bank, you may have diversified your services to improve profitability and gain more customers, widening your exposure to the potential for an E&O lawsuit that may include claims of errors or omissions in the handling of investment accounts, misrepresentation, or fraud.
Inside An E&O Policy
E&O insurance provides coverage to defend and indemnify financial institutions against claims alleging negligence or failure to perform their professional services. Yet it’s important to note that not all E&O policies are the same, which is why you need the expertise and experience of FGIB’s staff. We have been insuring the banking industry for more than three decades and understand what is required to meet our clients’ needs. A policy can be designed, for example, to include:
- Coverage for the insured business entity and its employees, directors, officers and other agents
- Automatic coverage for newly acquired subsidiaries
- Extended reporting period – a designated time period after a claims-made policy has expired during which a claim may be made and coverage triggered as if the claim had been made during the policy period
- Coverage may be extended to include lender liability, trust services or vicarious liability for services that a community bank may provide through a third party
Whether you own a large-scale operation with multiple branches, or are the only bank in town, make sure your business is protected with E&O coverage customized to address your exposures. Our experienced staff will outline the differences in coverage and design a policy to meet your needs.