About General Liability Insurance
All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).
Some of the risks CGL insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While businesses aren't legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.
Learn more about the risks covered by general liability insurance.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A MORTGAGE BROKERAGE
Example 1: During a meeting with a potential client in your office, they trip over a box left in the hallway. General liability insurance would cover the client’s medical bills and your legal fees in the event of a lawsuit.
Example 2: Your business launches a new website, featuring a photo protected under copyright law. The image’s owner sues for copyright infringement. General liability insurance would cover your legal fees and any payouts associated with this lawsuit.
Example 3: During a meeting in your office, a client sets her expensive purse on the counter directly under a roof leak. The leaking water destroys the purse and she seeks reparation. General liability insurance would cover the cost of replacing the damaged purse.
Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It's always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.
Cost Of General Liability Insurance
On average, mortgage brokerages in America spend between $400 - $700 per year for $1 million in general liability coverage.
Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:
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.
How much will the right insurance cost you?
Find what business insurance will cost for your business right nowGet a Free Quote
Other Types Of Coverage Mortgage Brokerages 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 mortgage brokerages should obtain:
Professional Liability Insurance
Professional liability insurance, or “errors and omissions” insurance, protects you against legal and financial problems when a client claims you made a mistake whether or not you believe you’re at fault. In addition to covering your legal fees, this policy would help pay for any damages awarded in a settlement and make up for your lost wages associated with the lawsuit.
Commercial Property Insurance
If you own the building in which you operate, you need commercial property insurance to cover your building and the business property stored there in the event of a fire, burglary, or natural disaster.
You can typically purchase this coverage as part of a business owner’s policy (BOP).
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 benefits stemming from a work-related accident.
You can purchase this coverage as part of a business owner’s policy (BOP) or as a standalone policy.
Types Of Coverage Some Mortgage Brokerages May Need
In addition to the policies outlined above, there are a few other types of coverage your mortgage brokerage may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.
Data Breach Insurance
Your computer systems store private client information, leaving them vulnerable to data breaches. Because most general liability policies exclude this type of loss, consider purchasing data breach insurance, or cyberattack insurance, for extra protection in the event of a lawsuit related to a hacking incident.
Additional Steps To Protect Your Business
Although it's easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business' financial losses after an incident occurs, but it's much better to avoid losses altogether.
With this in mind, here are three things you can do to better protect your business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
- Streamline your business' internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.
Frequently Asked Questions
What is included in a business owner’s policy?
A typical business owner's policy includes general liability, business interruption, and 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 business?
You should invest in 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 business from everything?
Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.