Negligence claims can have huge effects on the businesses and people they target. While most people may think of doctors or accountants when it comes to claims of negligence, it’s possible for banks to be held responsible for things that would turn into sizable lawsuits.
If corporate leaders at a bank make terrible decisions, it can cause a messy fallout. Not only would this cause financial panic within a financial institution, it would also cause those who initially trusted their bank to take their business elsewhere and possibly hinder further opportunities for new customers. There are a number of things banks can do to eschew costly negligence claims. Let’s take a look at some.
Directors & Officers Insurance
While banks can benefit from having an insurance plan, like general liability, in place, protecting their company when consumers fall victim to mistakes made by the bank, they can get specific with the type of coverage they need to keep away from costly claims. One of those safeguards is Directors & Officers insurance. This kind of insurance policy offers liability coverage for company managers to protect them from claims that can arise from actual or alleged wrongful acts when acting in the arena of their duties.
Another way banks are succumbing to negligence claims is through the rise in cyberattacks pointed at their operations. Cyber threats have made their way into every industry in the world, including banks, and are becoming more and more sophisticated and hard to spot. When customers lose their data or their finances because of a hacker, they can turn around and sue that bank that did not keep their sensitive information safe.
In Illinois, in 2007, a couple sued their bank following a cyberattack that ended up costing her more than $26,000. They claimed malpractice against the bank, which did not take the right steps to protect their assets from hackers, allowing them to infiltrate their account by simply stealing their password and username information.
Banks can financially protect their assets amidst the fallout from a cyber attack by bringing on cyber liability insurance, but they can also take steps to avoid negligence claims by bolstering their cybersecurity measures. Having regularly updated cybersecurity protection can prevent further damage from happening, especially as consumers continue to be more active with their finances through digital means.
Banks should take the right steps to keep their information safe as well as their consumers. Whether it’s good faith lending practices that are brought into question or a massive data breach overhaul, consumers have more rights than before and are feeling emboldened to take matters into their own hands.
About Financial Guaranty Insurance Brokers
Since 1983, Financial Guaranty Insurance Brokers has distinguished itself as a provider of Professional Liability, Cyber Liability, and Crime insurance products for entities of all types. To receive timely, personalized service from a knowledgeable and experienced staff, call us today at (626) 793-3330 to speak with one of our professionals.