If you’re bank director or officer, then you may have heard of civil money penalty liability insurance. This type of coverage helps protect against civil money penalties. In order to pick up this coverage, you have to purchase a standalone policy. This is an additional piece of coverage but it may still give you peace of mind.

What Does Civil Money Penalty Insurance Cover?

CMP insurance comes with a variety of benefits. The main coverage, however, includes the fines imposed by the regulatory agency. If there are allegations against a director or officer, the coverage will not pay for those defense fees.

What About Legal Fees?

The reason that civil money penalty liability insurance does not pay for your defense fees is because your D&O insurance already does. Keep in mind that this is a coverage separate from your D&O coverage. You retain those benefits, along with the standalone policy.

When it comes to your financial institution, you have to keep in mind the risk of having civil money penalties imposed on you. Many banks have gone through this and when it happens, the penalties can seriously hurt a financial institution. This is why it’s crucial for banks to protect themselves with the right type of insurance coverage, this includes civil money penalty insurance.