Company insurance is intended to safeguard the financial assets of a business owner and is a necessary investment for a mortgage brokerage.
This article will discuss the primary insurance coverage for mortgage brokers, general liability insurance, as well as additional products that are appropriate for this industry.
Mortgage Brokers 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:
Damage to property
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 MORTGAGE BROKERAGE
Example 1: A prospective customer trips over a box left in the corridor during a meeting at your office. In the case of a lawsuit, general liability insurance would cover the client’s medical expenditures as well as your legal fees.
Example 2: Your company develops a new website that includes a copyright-protected photograph. The image’s owner files a copyright infringement lawsuit. Your legal bills and any settlements related with this litigation would be covered by general liability insurance.
Example 3: During a meeting in your business, a customer places her costly handbag on the counter precisely under a roof leak. The purse is destroyed by the seeping water, and she wants restitution. The expense of replacing the destroyed purse would be covered by general liability insurance.
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
Mortgage brokerages in the United States pay an average of $400 – $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:
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 Mortgage Brokers
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 mortgage brokerages should have are as follows:
Insurance for Professional Liability
Professional liability insurance, sometimes known as “errors and omissions” insurance, protects you against legal and financial troubles if a customer claims you committed a mistake, regardless of whether you feel you are at fault. This coverage would cover your legal bills as well as any damages awarded in a settlement and make up for any lost earnings as a result of the litigation.
Insurance for Commercial Property
If you own the structure in which you operate, commercial property insurance is required to protect your building and the business items housed inside it in the case of a fire, burglary, or natural catastrophe.
This coverage is often available as part of a company owner’s insurance (BOP).
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 require time to recuperate, but also any disability benefits resulting from a workplace injury.
This coverage is available as part of a business owner’s policy (BOP) or as a separate policy.
Coverage Options Available to Mortgage Brokers
In addition to the insurance listed above, your mortgage brokerage may need other forms of coverage based on key 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.
Insurance for Data Breach
Because your computer systems hold sensitive customer information, they are exposed to data breaches. Because most general liability policies exclude this sort of damage, consider obtaining data breach insurance, also known as cyberattack insurance, to provide additional protection in the case of a hacking-related litigation.
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.