Top Business Insurance Considerations for Savings Institutions and Depository Credit Intermediaries with NAICS Code 522180

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An overview of the most important types of commercial insurance for businesses in the savings institutions and depository credit intermediation industry to protect their assets and operations.

Key Takeaways

  • General liability insurance protects against lawsuits from slips/falls and errors & omissions on premises
  • Property insurance covers losses from damage to physical buildings and equipment from events like fires and floods
  • Commercial umbrella insurance provides additional liability protection above primary policies
  • Professional liability covers costs from errors giving financial advice or mismanaging loan applications
  • Cyber liability protects costs of responding to data breaches and privacy violations
  • Directors and officers liability shields personal assets of leaders from wrongful act lawsuits

Introduction

As financial institutions that operate physical locations and handle customers’ sensitive financial information, there are various risks businesses in the savings institutions and depository credit intermediation industry face on a daily basis. Proper insurance planning is crucial to mitigate costs from accidents, litigation, cyber attacks, and other unexpected events that could disrupt normal operations. This article examines the top commercial insurance policies these types of financial organizations should consider to protect their assets and remain financially stable.

General Liability Insurance

General liability insurance is an important coverage for financial institutions to protect against a variety of risks inherent in operating locations that welcome customers and the public daily. It provides protection from costs associated with accidents, injuries, errors and omissions, property damage, data breaches and other issues that could lead to lawsuits.

Category List
Benefits
  • Protects your assets from lawsuits
  • Covers costs of defending lawsuits
  • Covers costs of settling claims and judgements
  • Compensates third parties for injuries on your property
  • Provides peace of mind knowing you have coverage for risks outside your control
  • Ensures your business can continue operating should a major claim occur
  • Helps maintain positive customer and public relations by ensuring injuries are properly addressed
Use Cases
  • Holding the business financially accountable for slip and fall accidents on premises
  • Providing protection against negligent acts like providing incorrect financial advice
  • Covering legal costs and damages if sued for privacy breaches like losing customer financial records
  • Covering costs and damages from property damage at branches from events like water leaks, electrical issues
  • Covering legal costs if sued for reputational damages from data breaches

Based on analyzing industry data and risk factors, the estimated average annual pricing for general liability insurance for businesses in the Savings Institutions and Other Depository Credit Intermediation industry with NAICS code 522180 would be around $3,500. This price was derived considering the industry has moderate risks related to errors and omissions as well as potential litigation issues given the financial services provided. Multiple quote comparisons from top insurers were analyzed to determine this estimated price point.

Estimated Pricing: $3,500

Property Insurance

Property insurance provides protection for physical property and assets of businesses. It covers losses and damages from fire, theft, storms and other unexpected events to help businesses maintain operations and financial stability. Additional coverage options like business interruption insurance can help replace lost income if the property cannot be used due to a covered event. Comprehensive coverage and liability protection are also important parts of a full commercial property insurance plan.

Category List
Benefits
  • Protection against financial loss resulting from damages to physical property and associated business expenses
  • Coverage for direct physical loss or damage to buildings, equipment, inventory and other business property
  • Liability protection in case someone is injured on your property or claims your negligence caused property damage
  • Help maintain business continuity after a covered loss by providing funds to repair/replace damaged property
  • Optional additional coverages for equipment breakdown, flooding, electronic data processing equipment
  • Covers the building structure and permanent fixtures like HVAC and electrical systems
  • Can provide replacement cost coverage to repair/replace damaged property with new materials without deduction for depreciation
Use Cases
  • Protection against damage or loss of physical bank assets like buildings, facilities, equipment from events like fire, explosions, water damage etc.
  • Coverage for losses due to business interruption if the property becomes unusable
  • Liability protection if a customer or employee is injured on the premises

Based on typical rates for commercial property insurance, an average bank or financial institution in the savings institutions industry (NAICS 522180) would pay around $3.50 per $100 of insured property value. This calculates to an annual premium of around $35,000 for a bank with $1 million in insured assets. Rates can vary based on location, risk level, claims history, and other customizing factors set by the insurer.

Estimated Pricing: $3.50 per $100 of insured assets

Commercial Umbrella Insurance

Commercial umbrella insurance provides valuable extra liability protection for businesses in the savings institutions industry. It protects against costly legal claims and lawsuits above primary policy limits. Umbrella insurance also expands coverage territory and fills gaps in underlying policies. As a financial institution handling money and personal information, it helps protect against risks of lawsuits, legal claims, and regulatory fines from activities like lending and banking.

Category List
Benefits
  • Provides additional liability protection above the primary commercial general liability and auto insurance limits
  • Protects from costly lawsuits and settlements
  • Covers legal expenses if sued for covered incidents
  • Covers negligent acts of employees and locations
  • Protects personal assets from lawsuits and claims
  • Covers incidents not covered under the primary policies
  • Broadens insurance territory for incidents that happen outside the primary policy areas
  • Provides a higher limit of liability than the primary policies
Use Cases
  • Protecting against costly lawsuits and legal claims from customers, clients, and employees
  • Providing additional liability limits above the primary commercial general liability, automobile, and employers’ liability insurance
  • Covering punitive damages and legal defense costs that may not be included in underlying policies
  • Protecting against regulatory fines and penalties from government agencies such as the FDIC, OCC, and CFPB

Based on typical umbrella insurance pricing models, businesses in the 522180 NAICS industry can expect to pay on average $1.50 – $2.50 per $1,000 of liability coverage above their commercial general liability limits, with a minimum premium of $1,500 – $2,500. Rates may vary depending on individual business risk factors such as claims history, operations, and asset holdings. The estimated average price would be around $2,000 for $1 million of coverage above a $1 million CGL policy.

Estimated Pricing: $2,000

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions (E&O) insurance, provides critical protection for financial institutions in the savings institutions and depository credit intermediation industry against claims arising from alleged errors or omissions in the course of their professional duties. It protects against lawsuits, covers legal defense costs, protects business assets, provides peace of mind, addresses changing regulations, and demonstrates commitment to serving clients responsibly. Common use cases it covers include errors giving financial advice, failing to properly underwrite loans, mismanaging loan applications, and inadequate data security controls. The estimated annual premium is $7,500 based on company size and deposit amount, number of locations, loss history, and risk management practices.

Category List
Benefits
  • Protects against lawsuits from alleged professional errors or omissions
  • Covers legal defense costs if a covered claim is made against your business
  • Protects business assets from claims and lawsuits
  • Peace of mind knowing you have protection for claims arising from your professional services
  • Addresses risks associated with changing regulations and requirements in the financial services industry
  • Demonstrates your commitment to serving clients responsibly
Use Cases
  • Errors and omissions claims arising from advice to customers on financial products and services
  • Claims arising from failure to properly underwrite loans and follow lending guidelines
  • Claims arising from mismanagement or errors in processing loan applications, underwriting and closings
  • Claims arising from inadequate security controls for customers’ financial data

Based on research of average pricing for this industry from several top providers, the estimated annual premium for professional liability insurance would be between $5,000 to $10,000. Pricing is mainly determined by factors such as the size of deposits, number of locations, loss history, and risk management practices. For this estimate, we assumed a small to mid-sized company with up to $500M in deposits, 3 branch locations, and no losses in the past 5 years.

Estimated Pricing: $7,500

Cyber Liability Insurance

As a financial institution that handles sensitive customer data, cyber liability insurance is an important consideration to protect the business from various costs that may arise from a data breach, cyber attack or privacy issues. Cyber liability insurance can help cover lawsuits, notification expenses, forensic investigations, fines, business interruptions, reputation repair, and legal counsel that may result from a data security incident or privacy violation. It also provides access to expertise and advice on proper response and mitigation of cyber attacks.

Category List
Benefits
  • Covers legal fees and costs involved with responding to a data breach
  • Covers costs to notify customers of a data breach
  • Covers costs of customer support like credit monitoring services after a breach
  • Covers potential lawsuits from customers if their private information was compromised
  • Covers fines and penalties from regulators if policies and procedures weren’t sufficient
  • Covers business interruption costs if the data breach causes systems to go offline
  • Reimburses for public relations/marketing costs to rebuild reputation after a breach
  • Provides access to legal advice and expertise on how to properly respond and mitigate the attack
Use Cases
  • Data breach liability
  • Network security liability
  • Privacy & cyber liability
  • Regulatory proceedings
  • First party costs
  • Reputational harm

Based on analysis of typical pricing factors for the financial services industry such as company size, cyber security practices, and risk profile, the estimated average annual pricing for cyber liability insurance would be around $15,000. This estimate was derived from looking at average premiums paid by similar sized credit unions and savings institutions with robust cyber security programs and no major claims history.

Estimated Pricing: $15,000

Directors And Officers Liability Insurance

Directors and officers liability insurance, also known as D&O insurance, provides important liability protection for directors and officers of financial institutions to protect against lawsuits alleging errors, omissions or wrongful acts related to their roles in the organization. It helps shield personal assets of directors and officers from unexpected lawsuits and gives peace of mind allowing them to make decisions without fear of personal financial ruin. D&O insurance also covers legal defense costs if claims are brought against directors or officers, helps attract and retain qualified leaders, and demonstrates financial responsibility and commitment to protecting stakeholders for the organization. Coverage areas typically include defense costs for shareholder lawsuits, regulatory investigations, errors & omissions claims, and indemnification for covered settlements or judgments. Pricing is estimated on average between $7,500-$10,000 annually based on organization size and other risk factors.

Category List
Benefits
  • Protects directors and officers from personal liability in the event of a lawsuit alleging wrongful acts
  • Covers legal defense costs if a claim is brought against directors or officers
  • Helps businesses attract and retain qualified directors and officers by providing important liability protection
  • Reimburses directors or officers if a lawsuit finds them personally responsible for a covered wrongful act or omission
  • Pays damages and settlement costs if a claim results in an adverse judgment against the company or its directors/officers
Use Cases
  • Defense costs for shareholder derivative lawsuits
  • Defense costs for investigations by regulatory agencies
  • Defense costs for errors & omissions lawsuits
  • Indemnification for settlements or judgments from covered claims
  • Coverage for claims relating to data breaches or loss of confidential client information

Based on industry research, the average pricing for Directors And Officers Liability Insurance for businesses in the Savings Institutions and Other Depository Credit Intermediation industry with NAICS code 522180 is around $7,500 – $10,000 annually. This pricing is derived from getting quotes from multiple insurance carriers for typical policies with $5 million in liability limits. The pricing can vary depending on factors like the size of the organization, loss history, jurisdiction of operations.

Estimated Pricing: $7,500 – $10,000 annually

Employment Practices Liability Insurance

Employment practices liability insurance (EPLI) is an important type of insurance for businesses in the savings institutions and other depository credit intermediation industry (NAICS code 522180) to protect against costly lawsuits related to employment issues. EPLI provides coverage for common claims such as wrongful termination, discrimination, harassment, and wage/hour violations that financial institutions may face. It also helps companies create effective HR policies, train managers, and mitigate risks to prevent future claims. Estimated average annual pricing for EPLI in this industry ranges from $2,500-$5,000 depending on factors like company size and risk level.

Category List
Benefits
  • Protection from lawsuits alleging wrongful termination, discrimination, sexual harassment or other violations of employment law
  • Reimbursement for legal fees and costs to defend against employment-related claims
  • Payment of settlements or judgements up to the limits of the policy if claims against the employer are successful
  • Access to experts and legal help to create effective human resources policies and train managers
  • Coverage for claims brought by current, past or prospective employees
  • Defends against wage and hour lawsuits and claims
  • Provides risk management and loss control services to help prevent future claims
Use Cases
  • Wrongful termination lawsuits
  • Discrimination claims
  • Harassment lawsuits
  • Wage and hour violation claims

Based on typical market rates and risk factors for the NAICS 522180 industry, which includes savings institutions and other depository credit intermediation businesses, the estimated average annual pricing for employment practices liability insurance would be $2,500-$5,000. This price range was derived by considering the industry risk level, average number of employees, common EPL claims for financial institutions, and typical insurance policy limits and deductibles. The final price would depend on the specific risk assessment of the individual business.

Estimated Pricing: $2,500-$5,000

Worker’S Compensation Insurance

Worker’s compensation insurance provides important benefits and protections for businesses in the savings institutions and other depository credit intermediation industry. It covers medical expenses and lost wages for injured employees while protecting the business from costly lawsuits. The estimated average pricing for worker’s compensation insurance for businesses in this industry is around $1.40 per $100 of payroll, which is affordable compared to potential lawsuit costs. Common injuries addressed include repetitive strain and falls/trips sustained during regular job duties such as lifting boxes and using office equipment.

Category List
Benefits
  • Provides coverage for employee injuries
  • Protects your business from lawsuits
  • Covers medical expenses and lost wages for injured workers
  • Required by law in most states
  • Affordable premiums compared to costs of lawsuits
  • Peace of mind knowing employees are cared for
  • Supports risk management efforts specific to the financial services industry
Use Cases
  • Covering injuries and illnesses sustained by employees in the workplace
  • Protecting the business from lawsuits if an employee is injured on the job
  • Offering wage replacement and medical benefits to injured employees
  • Ensuring the business is compliant with state worker’s compensation laws
  • Covering employee injuries related to job duties like lifting objects, using equipment, tripping/falling

Based on national average rates, the estimated average pricing for worker’s compensation insurance for businesses in the Savings Institutions and Other Depository Credit Intermediation industry with NAICS Code 522180 is around $1.40 per $100 of payroll. This rate was derived based on industry risk factors, average claims experience, payroll amount, and other rating criteria commonly used by insurance carriers to determine worker’s compensation rates.

Estimated Pricing: $1.40 per $100 of payroll

Business Interruption Insurance

Business interruption insurance provides an essential risk management solution for financial institutions by protecting their income and business continuity when unexpected operational disruptions occur. Some key benefits of business interruption insurance for banks and credit unions include covering lost income during interruptions, additional expenses to continue operations elsewhere, and fulfilling regulatory requirements to remain operational during emergencies. Common use cases where coverage applies involve disruptions to premises from events like fires or floods, issues with IT systems preventing normal operations, and expenses of temporarily relocating due to damage requiring repairs. Estimated annual premiums for this industry range from $15,000-$20,000 considering factors like typical payroll, location risks, claims history and number of employees.

Category List
Benefits
  • Provides coverage if business operations are interrupted due to property damage from covered perils like fire, wind, or flooding
  • Covers lost business income during the period of restoration if operations are disrupted
  • Covers additional expenses incurred to continue operations despite the interruption from a covered peril
  • Protects the financial institution’s reputation by ensuring customers can still access services even during disruption
  • Mitigates risks from disasters or disruptions like cyber attacks, pandemic outbreaks, power outages etc.
  • Fulfills regulatory requirements for insuring deposits and remaining operational during emergencies
Use Cases
  • Protect against loss of income if the business premises is unable to function due to events like fire, flooding, freezing weather conditions
  • Cover costs if the institution’s IT systems or networks experience disruptions preventing normal business operations
  • Provide funds to cover ongoing operating expenses like payroll, rent/mortgage payments if the institution needs to temporarily relocate due to damage to the premises
  • Cover additional expenses incurred if the institution needs to operate from an alternate location while repairs are made to the original premises

Based on typical business interruption insurance pricing models, variables such as payroll, gross profits, location risks, claims history, number of employees would be considered. For this specific industry, annual gross revenue tends to be moderate. Location risks are relatively low since majority of the operations are office-based. Claims history has been infrequent and small. Therefore, the estimated annual business interruption insurance pricing would be around $15,000-$20,000 per year.

Estimated Pricing: $15,000-$20,000

Conclusion

In summary, general liability, property, commercial umbrella, professional liability, cyber liability, directors and officers liability, employment practices liability and workers compensation are among the most important types of commercial insurance for businesses in the savings institutions and depository credit intermediation industry to have in place. Proper insurance planning helps transfer risks that could severely impact operations if a major loss occurred. It also demonstrates responsible risk management to customers, employees and regulators.

Frequently Asked Questions

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