When refer to insurance for banks, they are usually talking about the FDIC, the government agency that insures depositors’ funds up to $100,000. What about the banks themselves? The business of banking is risky. Banks hold other peoples’ money and often transact complex financial deals in the course of a normal day. When something goes wrong, and it happens sooner or later, banks can face substantial liability. Anything that allegedly causes another person to lose money can be brought to court. Expenses can quickly mount up even if the court rules in favor of the banking institution. When the plaintiff proves that the bank was at fault, the court can potentially award huge amounts of money in restitution and punitive damages. In the case of a smaller institution, this scenario could portend the end.
Insurance for banks can help alleviate such dire consequences. Insurance companies can customize a plan that will meet the need of just about any sized bank. Sometimes, insurance riders added to the existing policy provides enough coverage for smaller banks. The insurance company will normally write separate coverage for midsize and larger banks so that adequate protection can be guaranteed. The depositors can rest easy knowing that their money is safely insured while in the bank, and now the bankers can relax as well.