Are Your Directors and Officers Protected Against Regulatory Fines?

Recent years have seen an increasing number of regulatory fines levied against banking and financial institution executives. Without proper coverage, these individuals can be at risk of forfeiting personal funds and assets to pay these fines, but coverage for civil monetary penalties can help.

Why This Coverage Is Necessary

There are many instances where directors and officers of financial institutions are covered under a D&O policy. However, the FDIC states that civil monetary penalties cannot be covered under a D&O policy, which leaves the executives at risk of paying regulatory fines out of their own pockets. That’s why more and more directors and officers obtain a separate policy that protects them individually in case of regulatory investigation fines.

What This Policy Covers

This standalone policy covers legal fines of an individual up to $250,000 if a charge is brought against a director or officer. However, it does not cover legal costs, which means the individual is responsible for that portion.

Being Prepared for the Worst

Since financial institutions and banks are still paying for the financial crisis of recent years, coverage for civil monetary penalties is incredibly important to protect individual directors and officers that are charged as a result of a regulatory investigation. You can take preemptive measures by securing this policy to protect yourself and your assets before a regulatory investigation takes you by surprise.