Pub. 10 2019 Issue 1

Spring 2019 29 West Virginia Banker Insurance coverage and considerations While each unique insurance claim must be analyzed for cov- erage on its own facts, and while variations commonly exist in policy language, a few basic statements can be made about likely coverage outcomes in our bank insurance program. First, banks should know that in our program there is no specific “marijuana” exclusion on any of our program’s typ- ical liability policy forms. In fact, for a claim that otherwise satisfies the usual coverage requirements for a liability policy, our program’s broad form company liability insurance policy provides indemnity for the insured’s Defense Costs to defend the “marijuana-related claim.” In fact, we have paid indemnity dollars for Defense Costs to a bank that was named as a defendant in a marijuana-related lawsuit. This federal lawsuit accused the bank of participat- ing in a RICO conspiracy, along with a medical marijuana dispensary. The suit was brought by “NIMBY” plaintiffs that disputed the legitimacy of the state law decriminalization and regulatory scheme for medical marijuana. (The plaintiffs eventually dropped the bank from their lawsuit.) We must point out that while indemnity exists to defend the claim, no coverage would exist for a penalty or fine of any type, whether related to “marijuana” or otherwise. In addition, a final non-appealable judgment against an in- sured finding that the insured had committed “any fraudulent, dishonest or criminal act” or engaged in “any willful violation of any civil or criminal statute, regulation or law” could trigger a fraud/violation of law exclusion usually contained in our pro- gram’s liability policies. Banks interested in serving customers in the marijuana-relat- ed business niche have interesting challenges. Banks must manage the ever-evolving legal and business landscape. Banks must carefully manage the regulatory relationship, and satisfy expectations of regulators regarding compliance and risk management. Banks will need to think through the specific (and unfamiliar) needs of these customers, and at times, they will have to adapt traditional bank services to meet these needs. Finally, banks must also maintain an awareness of the role that an insur- ance program can play in addressing these related challenges.  About the Author and ABA Insurance Services Terence Cawley is a Liability Claims Manager with ABA Insurance Services. He is certified by the Ohio State Bar Association as a specialist in insurance coverage law. Prior to joining the ABA insurance program, Terry practiced law with several law firms in Cleveland, Ohio, concentrating on commercial litigation and insurance matters. He can be reached at tcawley@abais.com. WVBA Endorsed Program. Recognized for underwriting and claims handling expertise, ABA Insurance Services, is a member of Great American Insurance Group, providing D&O, bond, and cyber insurance to banks countrywide. For more information, visit abais.com, or contact Matt Craven at 800-274-5222 or mcraven@abais.com. BANKERS’ BANK - THE MORTGAGE EXPERTS BBKY MORTGAGE PROCESSING ABOUT US KEY BENEFITS FOR YOUR BANK • Leading Secondary Market Mortgage Processor • Experienced Mortgage Lenders • Simple and Effective Approach • Emphasis on Customer Service • No Processing Fees Regardless of Approval • Attract & Retain Mortgage Customers • Generate Fee Income • Reduce In-House Labor MORTGAGE LOAN PROGRAMS: Conventional | VA | FHA | Rural Housing MORTGAGE FINANCING: • Purchase • Refinance • Permanent Financing for New Construction MORTGAGE FINANCING TERMS AVAILABLE: 10 Year Fixed, 15 Year Fixed, 20 Year Fixed, 25 Year Fixed, & 30 Year Fixed TO LEARN MORE CONTACT MISSY HARROD, ASSISTANT VICE PRESIDENT PHONE: 800-248-3229 ext. 225 EMAIL: mharrod@bbky.com DIRECT DIAL: 502-695-2524