Mortgage Brokerage Business Insurance
Getting insurance for your mortgage brokerage is essential.
This is because you will want to protect your business’s assets against a variety of different risks, such as professional negligence claims, indemnification disputes, and contract law violations.
As the owner of a mortgage brokerage, you may also be required to purchase workers’ compensation insurance in order to protect your business against employment law-related disputes.
We’ll help you find the most personalized and affordable coverage for your unique business.
Recommended: Next Insurance is dedicated to matching small businesses with the right policy at the best price.
Best Insurance for a Mortgage Brokerage Business
General liability insurance is — generally speaking — one of the most important insurance policies for mortgage brokerages.
Some of the risks general liability insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
Having said that, it is important to understand that your mortgage brokerage will likely benefit from purchasing additional coverage policies as well.
This is because a general liability insurance policy will not be able to holistically protect it from all applicable risks.
Additional coverage policies you will likely benefit from considering include:
- Errors and omissions insurance: Protects your business against liability that arises as a result of a negligent act and/or omission.
- Workers’ compensation insurance: Protects your business against employee-related claims, such as wrongful termination allegations or payment disputes.
- Business interruption insurance: Covers part of your lost income in the event that you are required to temporarily stop operating due to wind damage, a fire, or another covered risk.
- Commercial property insurance: Covers the cost of repairing and/or replacing your business’s equipment (e.g., software, work laptops, etc.) in the event of damage or theft.
You will also need to spend some time in order to find the right type of business insurance provider for your mortgage brokerage.
As of 2024, there are two options available for small business owners:
- Online insurers (recommended) — Popular choices include Next Insurance and Tivly.
- Brick and mortar insurers — Popular choices include Nationwide and CNA.
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Cost of General Liability Insurance
On average, mortgage brokerages 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 mortgage brokerage business to other professional industries using the graph below.
Several factors will determine the price of your policy. These include your:
- Location
- Deductible
- 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.
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Discover the best coverage at the lowest rate in our affordable business insurance review.
Common Situations That General Liability Insurance May Cover for a Mortgage Brokerage Business
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.
Other Types of Coverage Mortgage Brokerage Businesses 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 of the most common types of coverage:
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.
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 shouldn’t be your only defense.
Here are several things you can do to better protect your mortgage brokerage business:
- 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.
Mortgage Brokerage Business Insurance FAQ
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.
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.
"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.
In most cases, yes. This is because the nature of a mortgage brokerage will mean that liability could theoretically arise as soon as you begin operating, and you will need to have purchased your business insurance coverage before this in order to be protected.
Not necessarily. Certain exceptions may be written directly into your mortgage brokerage business insurance policy, and some perils may be entirely uninsurable.
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.