Bank Business Insurance
Every bank needs insurance. Knowing which type of insurance you need and the best place to get it is the next step.
This article will cover the main types of business insurance and help you find the best bank insurance.
Best Insurance for a Bank
The most common and comprehensive type of bank business insurance is general liability insurance. We recommend general liability insurance as your first line of defense against a variety of the most general and commonly occurring claims.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While a bank isn’t legally required to carry general liability insurance, operating without it is extremely risky. If your bank is sued, you could face fees totaling hundreds of thousands of dollars (or more).
Cost of General Liability Insurance
On average, banks in America spend between $400 - $700 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a bank to other professional industries using the graph below.
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
Common Situations That General Liability Insurance May Cover for a Bank
Example 1: When a guest enters the bank on a rainy day, they slip on a patch of wet floor that lacks a warning sign. General liability insurance should cover the costs of any resulting injuries.
Example 2: An employee miscalculates the amount of money a customer took and accuses them of stealing. General liability insurance should cover your legal defense for any slander charges the customer files against you.
Example 3: You make a mistake in your advertising materials, and a customer sues you for a financial loss they incurred based on the incorrect information. General liability would help cover the customer’s losses or your legal fees to fight their claim in court.
Other Types of Coverage Banks Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some of the most common types of coverage:
Commercial Property Insurance
Commercial property insurance protects the building in which you operate, the grounds within your property, and the business-related equipment you store there. If a fire or major storm damages your building, commercial property insurance would cover the cost of repairing your building and replacing your lost equipment and other business materials so you can recover quickly.
Workers’ Compensation Insurance
Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover, but also any disability or death benefits stemming from a work-related accident.
Professional Liability Insurance
Professional liability insurance protects your employees in the event they make an error on the job. If one of your financial advisors fails to inform a client of a rarely invoked clause on an annuity contract, for example, this coverage likely would pay for any losses the customer incurs due to negligence.
Data Breach Insurance
Banks are a magnet for potential hackers and virtual thieves. If your business loses sensitive information as a result of a data breach, this coverage would help pay to restore your computer network and compensate customers for any related financial losses.
Commercial Crime Insurance
Given the amount of cash stored in banks, commercial crime insurance helps protect your business from both employee and outsider theft. Because a single major event can result in a substantial financial loss, it helps to have as much protection as possible.
Commercial Umbrella Insurance
While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your bank:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Bank Business Insurance FAQ
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
You should invest in business insurance coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.