Micro Lending Company Insurance
Every micro lending company needs insurance. Knowing which type of insurance you need and the best place to get it is the next step.
This article will cover the main types of business insurance and help you find the best micro lending company insurance.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Micro Lending Company
The most common and comprehensive type of micro lending company insurance is general liability insurance. We recommend general liability insurance as your first line of defense against a variety of the most general and commonly occurring claims.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While a micro lending company isn’t legally required to carry general liability insurance, operating without it is extremely risky. If your micro lending company is sued, you could face fees totaling hundreds of thousands of dollars (or more).
Find the Right Policy at the Best Rate
Using a fully online insurance provider saves time and money and offers the most accurate quotes.
Cost of General Liability Insurance
On average, microlending companies in America spend between $400 - $700 per year for $1 million in general liability coverage.
Compare the average cost of general liability insurance for a micro lending company to other professional industries using the graph below:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy.
A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
Start an Online Quote for Insurance
Finding the most affordable premium starts with getting accurate quotes from highly rated providers.
Common Situations That General Liability Insurance May Cover for a Micro Lending Company
Example 1: As a potential investor tours your microlending company, she trips on some uneven flooring, breaks an arm, and demands your business pay for her medical treatment. General liability insurance would cover her medical expenses.
Example 2: A competing lender sues your business for libel. While you’re unaware of an instance in which you libeled his company, you know you need a lawyer to protect your interests. General liability insurance would cover your legal fees and any required settlement.
Example 3: While visiting your company to write a story about microlending, a reporter slips on some wet flooring in the restroom, breaks a wrist, and decides to sue your business because you didn’t display a “wet floor” sign. General liability insurance would cover your legal defense and any required settlement.
Check out our review of the Best Small Business Insurance Companies.
Other Types of Coverage Micro Lending Companies Need
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all microlending companies should obtain:
Professional Liability Insurance
While you strive to provide sound advice to your clients, there’s always a chance someone might decide you made a mistake and claim your professional guidance caused them injury. If a client sues your business for negligence, professional liability insurance would cover your legal fees and any required settlement.
Workers’ Compensation Insurance
Most states require businesses to carry workers’ compensation insurance for their part-time and full-time employees. This coverage protects your employees if they become injured at work or fall ill after a work-related accident. It not only covers an employee’s medical bills and lost wages if they need time to recover but also any disability or death benefits stemming from a workplace accident.
Data Breach Insurance
Your microlending business could make a tempting target for online hackers given the amount of sensitive data you collect to help your clients. This coverage — also known as cyber attack insurance — protects your business from liability if a cybercriminal hacks into your computer system, steals sensitive client data, and your clients sue you for damages. In the event of such a lawsuit, data breach insurance would cover your legal fees and any settlement payouts.
Commercial Umbrella Insurance
While your general liability insurance policy covers most claims, some accidents or lawsuits may be so catastrophic that they threaten to exhaust the limits of your primary coverage. Commercial umbrella insurance protects you from paying out-of-pocket for any legal fees and awarded damages that exceed your primary policy.
Additional Steps To Protect Your Business
Although it’s easy (and essential) to invest in business insurance, it shouldn’t be your only defense.
Here are several things you can do to better protect your micro lending company:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up an LLC or corporation to protect your personal assets. (Visit our step-by-step guides to learn how to form an LLC or corporation in your state.)
- Stay up to date with business licensing.
- Maintain your corporate veil.
Business Insurance Is the Best Way to Protect Your Business
If you're starting a new business, then you need business insurance. It's as simple as that. The protection offered by an LLC will protect your personal assets, but your business's assets are still open to liability in the case of a lawsuit or other loss.
Be sure that everything you've built is safe by getting business insurance.
Micro Lending Company Insurance FAQ
Can I buy business insurance online for my micro lending company?
Yes, absolutely. You will need to first get a quote from an online business insurance provider like Next Insurance. Next allows you to then purchase a policy immediately and your coverage will be active within 48 hours.
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and commercial property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
"Business insurance" is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start a micro lending company?
You should invest in business insurance coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.
Will insurance protect my micro lending company from everything?
Not necessarily. Certain exceptions may be written directly into your micro lending company insurance policy, and some perils may be entirely uninsurable.
Is general liability the same as business owners?
A general liability insurance policy covers only liability losses. A business owner's policy covers both liability and property losses.
How do I choose the best general liability insurance?
The best general liability coverage for your business really depends on the amount of coverage you’re comfortable with and how often you expect to file a claim. A relatively safe business with a very low risk of accident or legal liability could opt for lower premiums with higher deductibles.
However, if you are in an accident or injury-prone industry or are making advertising claims about the effectiveness of your service or product, you may wish to consider more extensive coverage. We recommend using a digital insurance provider like Next Insurance.
Do I need business insurance if I already have an LLC?
Yes, an LLC is meant to create a legal barrier between your business and your personal assets and credit. If you haven’t formed an LLC yet, use our Form an LLC guide to get started.
An LLC doesn’t protect your business assets from lawsuits and liability– that’s where business insurance comes in. Business insurance helps protect your business from liability and risk.