WASHINGTON — To help protect against rising litigation costs that are coming at credit unions from new angles, CUNA Mutual Group has introduced coverage that reimburses certain defense costs associated with claims that are commonly not covered by liability policies.
CUNA Mutual is introducing its Enhanced Defense Reimbursement coverage Tuesday at CUNA's Governmental Affairs Conference.
The new coverage, within CUNA Mutual's Management & Professional Liability insurance policy, protects against many of the new types of lawsuits facing credit unions the past few years, such as injunctive relief damages related to ATMs and Americans with Disabilities Act litigation, heightened patent troll litigation activity, and growing regulatory risks driven by Consumer Financial Protection Bureau rulemaking and disgorgement claims, such as overdraft re-sequencing litigation.
"This is a coverage designed to protect credit unions against this emerging litigation that traditional liability policies are not always designed to protect credit unions against," CUNA Mutual Group VP-Commercial Products John Wallace told Credit Union Journal."This coverage is the first of its kind."
Wallace said CUNA Mutual was spurred to create the new product after hearing from credit unions facing new and increased litigation risks that were not covered under their traditional policies.
"More and more litigation risks are emerging that are not covered by traditional liability insurance policies," said Wallace. "Even the most vigilant credit unions can fall victim to these (emerging) lawsuits."
Wallace said patent infringement lawsuit activity against CUs has been increasing, saying a typical patent infringement case through trial could cost from $400,000 to $500,000.
Wallace added that new rules from the Consumer Financial Protection Bureau went into effect Jan. 1, 2014, could expose credit unions to potential violations. "While the CFPB has direct enforcement for credit unions with more than $10 billion in assets, their rules will impact all credit unions."
