If you lead a financial institution, you might rely on your bank’s D&O policy to protect you from liability related to your decision making. While such coverage is standard in the industry, it often falls short in protecting directors and officers from exposure due to their individual actions. To bridge the gap, bank leaders often purchase their own coverage for civil monetary penalties.
Every day, banking regulators assess monetary penalties against financial institutions for a variety of reasons. Occasionally, however, officials direct civil money penalties at individual bank directors for perceived wrongdoing. These penalties often fall outside the bank’s D&O coverage, requiring personal payment by the bank’s director or officers. For increase peace of mind, then, bank leaders often decide to pursue other coverage options. If you aren’t satisfied in the protection offered by the bank’s policy, coverage for civil monetary penalties might be right for you.
Unlike D&O policies that the bank purchases, buying civil monetary penalties coverage typically falls to the bank director or officers in an individual capacity. Leaders usually can decide how much coverage they need and the deductible they want to pay. Generally, however, the costs of defending allegations of wrongdoing are not included in coverage for civil monetary penalties. Nonetheless, for more comprehensive protection than the bank’s D&O policy provides, you might opt for your own policy.