Financial institutions are often under a careful watch these days, which has led to the increase in insurance programs. One such program is a means of added security called civil money penalty liability insurance that protects bank executives against legal and regulatory fines in the event of wrongdoing.
What Is It?
After the recent financial crisis, banks and financial institutions were under more scrutiny than ever before and faced fines for mishandling money. The FDIC introduced civil money penalties to hold bank directors and officers accountable for their actions. This is a separate insurance policy from directors and officers liability insurance, as a D&O policy cannot protect against civil money penalties according to the rules set by the FDIC. In short, it is an added layer of insurance protection for bank executives.
How Does It Help?
A civil money penalty can directly affect the financial assets of a bank executive and is not covered by the bank’s insurance. As such, directors and officers of financial institutions benefit by having civil money penalty liability insurance that offers protection in times when lawsuits or fines related to negligence or misappropriation of funds arise.
Covering Bank Executives in Times of Need
You may never have a charge of financial wrongdoing brought against you, but it’s better to be safe than sorry. You can protect your personal assets and the company’s reputation by carrying civil money penalty liability insurance.