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Company insurance is intended to safeguard the financial assets of a business owner and is a vital investment for a debt collecting firm.

Company insurance is intended to safeguard the financial assets of a business owner and is a vital investment for a debt collecting firm.

This article will discuss the primary insurance coverage for debt collection firms, general liability insurance, as well as additional policies that are appropriate for this industry.

Debt Collection Agencies Need General Liability Insurance

Every firm, regardless of sector, has risks that should be insured. General liability insurance is the most frequent and comprehensive form of coverage that company owners purchase.

General liability insurance covers the following risks:

Physical harm

Damage to property

Medical expenses

Legal defence and decision

Personal and commercial harm

While general liability insurance is not legally needed for companies, operating without it is exceedingly dangerous. If your company is sued, you might face costs in the hundreds of thousands of dollars (or more). The only way to avoid this sort of catastrophe from destroying your organisation is to have an adequate general liability insurance coverage in place to assist pay for these losses.


Example 1: Due to your debt collection procedures, a debtor accuses you of harassment. Your legal fees to contest or settle the harassment accusation would be covered by general liability insurance.

Example 2: A prospective customer visits your agency and stumbles on a pocketbook left in the corridor by one of your staff. The prospective client’s medical expenditures would be covered by general liability insurance.

Example 3: Your firm mistakenly labels the incorrect individual as a debtor, and they sue you for slandering their reputation. Your legal defence expenses would be covered by general liability insurance.

Example 4: Another firm sues you for copyright infringement on the grounds that your agency’s name is similar to its own. General liability insurance would cover the costs of defending or settling the lawsuit.

Of course, this is not an entire list of risks covered by a general liability insurance policy, and certain situations may result in a specific peril not being covered. To minimise coverage gaps, it’s always better to speak with your agent about the terms of your policy.

General Liability Insurance Cost

Debt collection firms in the United States typically pay between $400 and $700 per year for $1 million in general liability insurance.

The cost of your coverage will be determined by a number of variables. Among them are your:



Employees’ number

Per-occurrence restriction

The overall aggregate limit

You may be able to get general liability insurance at a lower cost if you buy it as part of a business owner’s policy (BOP) rather than as a separate policy. A business interruption policy (BOP) is a more complete option that covers numerous types of coverage, such as business interruption and property insurance.

Other Types of Coverage Required by Debt Collection Agencies

While general liability insurance is the most crucial, there are various different types of coverage to be aware of. Other forms of insurance that all debt collecting businesses should have are as follows:

Insurance for Commercial Property

Commercial property insurance protects your business-related property against a number of disasters such as theft, vandalism, and harsh weather if you own the facility in which you operate. It covers the cost of repairing or rebuilding the physical structure as well as any equipment stored there.

Insurance for Workers’ Compensation

Workers’ compensation insurance is required in most states for both part-time and full-time employees. This coverage covers your workers if they are hurt at work or get sick as a result of a workplace accident. It covers not just an employee’s medical expenditures and missed pay if they need time off to recuperate, but also any disability or death benefits resulting from a work-related accident.

Insurance for Professional Liability

If your company provides debt counselling as well as collecting services, this insurance will cover any incorrect or negligent advice you may give. If, for example, a customer accuses your organisation of revenue loss as a result of your consulting services, professional liability insurance would cover your legal bills if that client decided to suit.

Insurance for Data Breach

Because your company gathers and retains information on its customers and individual debtors, there is always the possibility of a cyber attack. Damages are covered by data breach insurance if a hacker obtains information about your company, customers, and target debtors.

Coverage Options for Debt Collection Agencies

In addition to the insurance listed above, your debt collection firm may need other forms of coverage based on particular elements of your activities. Some of them may not apply to you, so be sure to ask your agent whether policies are appropriate for your company.

Umbrella Insurance for Businesses

While most claims are covered by your general liability insurance policy, certain incidents or lawsuits may be so severe that they threaten to deplete the limits of your main coverage. Commercial umbrella insurance protects you from having to pay for legal expenses and awarded damages that exceed the limits of your main policy out of pocket.

Additional Security Measures for Your Company

Although investing in company insurance is simple (and necessary), it should not be your first line of defence. Yes, insurance will reimburse your company for cash losses incurred as a result of an occurrence, but it is much preferable to avoid losses altogether.

With this in mind, here are a few steps you can take to better secure your company:

Make use of legally binding contracts and other business agreements. (We provide free templates for several of the most often used legal forms.)

To safeguard your personal assets, form a limited liability company (LLC) or a corporation. (To discover how to incorporate an LLC or company in your state, see our step-by-step tutorials.)

Keep your company licences up to date.

Streamline the internal procedures of your company. This will eliminate unneeded variables from routine activities and establish a secure, consistent environment in which to do business.

If your company is an LLC, you should check into LLC insurance.