If you serve on the board of a bank or other financial institution, you probably already know that there is substantial risk of being held personally liable for alleged impropriety. Until recently, you may have been protected from liability for civil monetary penalties, or CMP, by insurance coverage offered by your institution; however, the FDIC has recently clarified that such policies may not be provided by banks for their directors and officers. If you consider not having coverage for civil monetary penalties to be an unacceptable option, purchasing a personal CMP insurance policy is something to consider.
When selecting a CMP policy, there are a few factors to consider which can affect your annual premium. The first aspect of your policy to consider is the deductible amount. This is the amount you will have to pay if you file a claim before the policy pays anything out. Deductibles can go as low as $0, but the lower the deductible you choose, the higher your annual premium will be. The second factor you will need to decide on is your policy’s coverage limit. Choosing a higher limit means that your policy will cover a higher penalty, but your premium will again be higher.
As you know, working in a position of power in the financial industry comes with personal liability. Choosing the right coverage for civil monetary penalties is an important way of mitigating your risk.