ATM Insurance—Do You Need It?
ATM insurance is not legally required, but it is an inexpensive way to protect yourself against expensive accidents and other mishaps. Since your ATM machine is not owned by a bank, you are not subject to FDIC protection. While you can get ATM business-specific insurance, you don’t have to. A general liability policy might be enough, depending on your needs.
Most location owners will expect you to at least have this coverage before they agree to work with you. So, getting a policy ahead of time will help you navigate this potential objection to a location agreement.
In this article, we’ll cover different types of insurance so that you know what you’re looking for!
General Liability Insurance
All businesses face risks. An ATM business is no different. Business insurance, then, is designed to protect your assets. The most common and most important policy business owners purchase is general liability.
General liability insurance covers bodily injury, property damage, medical payments, and legal defense. For example, if you accidentally damage the location owner’s property while moving or installing your machine, insurance would cover the cost of repairs. Or, if a customer injures him or herself while using your machine, insurance would cover the cost of treating the injuries. And if a disgruntled customer takes legal action against you or your company, insurance would cover the costs of defending yourself.
You can expect to spend about $400-$700 a year for $1 million in general liability coverage. But you might have noticed that general liability insurance won’t cover your machine or the cash inside. So if you want more than general liability coverage, you will need to look for a more specialized insurance policy.
ATM Business Insurance
ATM insurance is designed to protect you against loss of your ATM machine and the cash inside. This is often referred to as Crime Coverage which protects you in the event of the following situations:
- Employee Dishonesty – If you hire someone to vault your machine or perform any kind of service or maintenance, and that employee steals from your machine, crime coverage would protect you.
- Robbery – If someone steals cash from you or an employee while, say, vaulting the machine, your loss would be covered.
- Burglary – Burglary refers to theft of cash from the ATM machine itself.
- Property – This applies to damage to or loss of the ATM machine (also referred to as mysterious disappearance).
- Liability – Just like a general liability policy, liability coverage protects you against the cost of legal defense, bodily injury, and property damage incurred through the operation of your machine.
Now, not every policy will cover all scenarios. So you will want to talk to your agent about the specifics of your policy to make sure you know exactly what is covered and what isn’t.
Just like any other type of insurance policy you might have, you purchase enough to cover each machine you own. Your premium is based on how much coverage you need. Whatever risks aren’t covered under the main policy you can sometimes add on. So you just have to decide what risks you specifically want to mitigate and see if your insurance company offers coverage for those scenarios.
Other Types of Coverage
You can get commercial auto insurance to cover your or your employees’ vehicles while on the road to and from your ATM locations. Any vehicle that you use for business purposes can be covered under commercial auto insurance.
Commercial property insurance covers any tools you use to maintain your ATM machine. This coverage also applies to any facility where you store your ATM machine(s). In the event of a fire, for example, your tools, machine(s), and other affected property would be covered.
If you hire employees to help you operate your ATM business, you might be required by law to carry workers’ compensation insurance. It depends on your state. Workers’ compensation helps you pay for any medical bills employees incur while on the job. If an employee injures him or herself while servicing or operating your ATM machine, this insurance prevents you from having to pay out of pocket.
Like we mentioned before, crime insurance protects you against burglary and robbery whether by an unknown perpetrator or by someone who works for you. Either way, crime coverage protects you against theft of the machine and/or the cash inside.
Some ATM insurance companies will offer coverage for cash in transit. But if you hire an armored car service, these companies often carry their own insurance. This coverage is typically reserved for companies that need to insure fleets of armored vehicles. However, you can ask about contingency coverage that kicks in if the other company’s insurance fails to pay.
Another threat, although rare, is “jackpotting”. Jackpotting happens when a hacker creates a malfunction causing an ATM machine to dispense all of its cash. Typically logged as a valid transaction, this could create a loophole for insurance companies to not recognize it as a theft claim and deny coverage.
More Ways to Mitigate Risk
In addition to purchasing insurance, to help set your mind at ease, there are some other security tips you can implement to mitigate risk. First and foremost, you want to place your ATM machine strategically.
Make sure the machine is well-lit and within eyesight of on-site employees. Try to keep the machine away from glass doors or windows that are easy to breach. Bolt the machine down to prevent its removal, and limit access to the case.
Make sure the machine is in the range of nearby security cameras, or purchase your own. Cameras not only deter vandalism and theft, but they can also help catch criminals. Some insurance companies will require you to have the machine bolted down and have cameras and possibly an alarm system if the location is not open 24/7 as a condition of coverage.
There are also business practices you can implement to mitigate certain risks. For example, use remote online monitoring to check on your machine when you’re off-site. Only provide keys to people you trust. Regularly update software to prevent logical attacks (attacks that involve breaching software and hardware). And consider keeping an irregular vaulting schedule to prevent robbery.
You definitely don’t have to set up an LLC or corporation for your business, but if you do, you could benefit from having protection for your personal assets. Then you can look into LLC insurance. Staying up-to-date with business licensing can help, too.
Finally, add any necessary clauses to your contracts and other documents. This can help you establish what risks you will assume and which you want the location owner to assume.
So, do you need insurance for your ATM business? Not legally. But it is definitely a good idea to at least purchase general liability insurance. Most location owners will want you to be covered before they enter into a partnership with you anyway.
If you decide you’d like alternative or additional coverage, you can shop around and speak to an agent about the best policy for your needs. Your specific needs might depend on how many machines you have to insure, how many people (if any) you employ, and where your machine(s) are located. In the end, you know what’s best for your business. But if you’d like to speak to someone with years of industry experience about which scenarios are more common than others, contact us today!
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