Banks and other financial lending institutions make it their job to provide financial protection to their customers. Their clients expect that any and all transactions will be completed properly and without error. Professional Liability Insurance for Bankers provides protection for financial professionals against claims of wrongdoing filed by its customers.
Bankers professional liability insurance is a form of errors and omissions coverage. Those who work in the banking industry, and the institutions they work for, need a policy that responds to any actual or alleged omission, error, misstatement, misleading statement, neglect or breach of duty by an insured in rendering or failure to render their professional services.
Different types of errors are grounds for a lawsuit
What constitutes an error that might result in a claim against a bank employee? Let’s say, for example, that your bank acts as depository for transactions made by a client. Your employee transposes numbers on two merchant accounts, causing credits to be deposited erroneously into the wrong account. By the time that the bank discovers the error, the funds have already been withdrawn by the business that was in receipt of the erroneous deposit. The client incurring the loss then sues the bank.
Bankers professional liability protects against losses resulting from wrongful professional services acts and helps pay any expenses associated with mounting a defense in a lawsuit, or paying a judgment if a plaintiff wins and is awarded a settlement.
Professional Liability Insurance for Bankers does not cover fraudulent or dishonest behavior, deliberate violations of laws or other criminal acts. It also does not cover claims that are pending at the time the policy is taken out, nor does it cover libel, slander, defamation or invasion of privacy.
It is a widely held belief that more robust regulation is coming to the financial institution industry and that mortgage bankers may be impacted in some manner. There is also a good chance that there will be a federal regulator monitoring consumer financial products, such as mortgages and credit cards. Furthermore, if Congress passes legislation targeting non-depository financial institutions by enacting a “Duty of Care” provision, mortgage originators will almost certainly need professional liability insurance to handle any claims of misappropriation.