Company insurance is intended to safeguard the financial assets of a business owner and is a crucial investment for a financial counsellor.
This article will discuss the primary insurance coverage for financial consultants, general liability insurance, as well as additional products that are appropriate for this industry.
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Financial Consultants’ 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.
GENERAL LIABILITY INSURANCE MAY COVER COMMON SITUATIONS FOR A FINANCIAL CONSULTANT
Example 1: A customer comes into your office for a meeting and stumbles over a trash can placed in the middle of an aisle, breaking his wrist. The medical claims resulting from the injury would most likely be covered by general liability insurance.
Example 2: While counselling a customer on their financial options, one of your staff explains an annuity provision incorrectly. General liability insurance may be able to assist pay the costs if the customer seeks reimbursement for any resulting losses.
Example 3: A customer determines that your marketing effort is deceptive or misleading. General liability insurance will cover the expenses of defending this action in court as well as any possible settlement fees.
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
Financial advisors in the United States typically pay between $400 and $700 per year for $1 million in general liability coverage.
The cost of your coverage will be determined by a number of variables. Among them are your:
Location
Deductible
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 Insurance Required by Financial Consultants
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 financial experts should have are as follows:
Insurance for Commercial Property
Property insurance protects the physical grounds, building structure, and contents. Financial consultants generally have a range of costly computer equipment, and this insurance may assist in covering the expense of replacing or repairing it if it is destroyed in a covered catastrophe such as a fire or storm.
Insurance for Professional Liability
Financial advisors have a highly delicate profession since they provide advise on very personal matters. Professional liability insurance is provided to assist cover legal expenses in the event that a client believes the advice they received harmed them, whether as a consequence of carelessness or an unanticipated swing in the market.
Coverage Options for Some Financial Consultants
In addition to the insurance listed above, your financial consultant may demand 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
Commercial umbrella insurance for a financial consulting company is not required, although it is strongly advised. When the limitations of your general liability coverage are reached, umbrella insurance gives the extra financial resources required to defend yourself against large legal claims.
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 pay for your business’ financial losses once an event happens, but it’s far 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.