CMP coverage is a standalone policy purchased by the officer or director of a financial institution. This coverage protects them against civil monetary penalties. These are fines related to individuals or institutions performing a possible wrongdoing. In many cases, it’s important to have this extra coverage in order to protect yourself.
What Is Coverage for Civil Monetary Penalties?
Civil monetary penalty coverage covers the director or officer’s liability. Keep in mind that this does not protect the entire bank. This insurance is an extra policy. Do not try to replace your existing coverage with it. In some cases, a director or officer is the one who is going to be held accountable. This is why you need separate coverage.
Why Is Coverage Necessary?
Civil money penalties are still a risk for bank officials. CMPs exacted against bank directors are on the rise. Without insurance, you are vulnerable. If proceedings result in fines, you would have to pay. This can be devastating for a bank. These fines and fees are difficult to pay and many directors and officers do not have the savings to cover it. It’s better to have protection in place than to risk it later on.
When it comes to insurance coverage, it’s crucial to cover all of the bases. This is why it’s important to have coverage for civil monetary penalties.