While most people know about doctors and lawyers malpractice insurance, professional liability insurance for financial institutions is less known. A bankers liability policy covers a financial institution in case a stakeholder alleges that you are responsible for a failed service or wrong expectations. E&O insurance is the common way to refer to this type of liability coverage.
Liabilities in the Financial Industry
Every business has its share of risk. With financial institutions, the risks are unique but specific. Many of the liabilities that you may be responsible generate from the following:
- Alleged dishonest acts or wrongdoings of an employee
- Failed risk control
- Management contract breach
- Agreed investment parameters breach
- Failed due diligence
- Trades executed incorrectly
When it comes to a bankers liability policy, the wrongdoing cannot be intentional. Illegal acts or dishonest and fraudulent acts are not covered.
Risks Covered By Bankers Liability
What risks does the policy cover? The full answer depends on the insurance coverage itself. Many policies have differences and may include or exclude certain aspects. These are many of the risks, however, covered by bankers liability:
- Errors and omissions by professionals
- Defense and legal fees
As a financial institution, you can’t afford to go unprotected. Clients may sue for a number of different reasons. Even if you practice due diligence, it’s possible. This is why bankers liability is crucial.