Depositor Liability

Depositor Liability protects against losses arising from Wrongful Acts in establishing, maintaining, administering or servicing any FDIC-insured deposit account or processing any transaction related to such account.

Sample Endorsement
Coverage Summary

Claims Examples
  • An individual acts as the custodian of numerous accounts at a bank. There are multiple depositor agreements on the accounts providing varying levels of authority for the custodian. The bank grants broad authority across the accounts that allows the custodian to make unauthorized fund transfers between them. The customers incur a loss and sue the bank for negligence in failing to enforce the terms of the depositor agreements.
  • A bank acts as a depository for ACH transactions of a larger institution. A bank employee transposes numbers on two merchant accounts, causing ACH credits to be erroneously deposited into the wrong account. When the error is discovered, the funds have already been withdrawn by the business that had received them. The company that incurs the loss sues the bank.
  • Available as part of the Bankers Professional Liability endorsement; part of the Broad Form Company Liability endorsement; or as a separate endorsement to the D&O Policy.
  • Depositor Liability claims can result from banks honoring instruments with improper endorsements, erroneous asset transfers, and general account errors.

Notwithstanding any language to the contrary, nothing contained herein constitutes nor is intended to constitute an offer, inducement, promise, or contract of any kind. All coverage descriptions and claims examples are provided for informational and educational purposes only and are not a representation as to coverage for any particular claim and are not represented to be error free. Coverage for any claim is determined upon the specific facts of the claim, the terms and conditions of the policy and applicable law. For details on the coverage provided by your specific contract of insurance, please refer to your policy. Coverage is subject to underwriting guidelines and may not be available in all states. Limits may be capped for underwriting reasons. Any links to any sites which are not originated by ABA Insurance Services Inc. (ABAIS) are provided only as a courtesy and are not intended to nor do they constitute an endorsement by ABAIS of the linked materials.