Lending institutions allow many US citizens opportunities to increase their financial portfolios by putting their money in interest-yielding accounts. Bankers’ professional liability (BPL) insurance allows banks to protect themselves from claims of wrongdoing in the handling of these funds. Community banks may find themselves facing allegations of negligently representing the quality of its investments or offering poor financial advice.
A BPL liability policy can provide coverage against claims arising from allegations of wrongful acts, errors, or omissions in the performance of professional services by a community bank and its many employees. Coverage can be expanded to include lender liability, trust services or vicarious liability for the different types of services that a community bank willingly provides, often through a third party.
How banks can protect their interests
Because professional liability policies for banks have become increasingly complex over the years, it’s important for brokers to educate themselves about these coverages. They should conduct a thorough review of any current policies in conjunction with the bank’s other coverages, including property/casualty, general liability, etc. in order to identify any gaps that may give rise to potential risks.
As more banks move into new areas where they are developing services to appeal to today’s tech-savvy consumers, there are greater exposures that must be considered. In addition, they will need to address information risk and network security liability issues, many of which are now occurring due to a lack of network security and the imminent danger of being hacked.
Brokers should encourage their customers that own and operate these lending institutions to consider coverage that is available and will address breach of data by outsiders, as well as employees, the likelihood of theft or loss, especially from the removal of media such as laptops and PDAs, and the risk of injury resulting from the unauthorized use or disclosure of private information in the bank’s custody.
With advances in technology there comes advances in techniques to steal data for profit, or merely to disrupt normal business practices. Having coverage to address these concerns, along with a banker professional liability policy to address any liability issues that may occur during normal operations is essential to the bank’s continued success.