Business Insurance Tips For Mortgage Brokers
Mortgage brokers are facing an increasing need to acquire a good business insurance policy. Both large and small brokerage firms are susceptible to a variety of lawsuits, but powerful business insurance protects brokerage firms from, well, going broke. Here’s a handy guide to business insurance for mortgage brokers.
Build a Versatile Policy
First of all, the types of claims that mortgage brokers face are very different than the standard claims levied against other professionals. Many claims issued against brokerage firms relate to mismanagement of funds or negligence. This is why it’s important to consult with a legal professional before purchasing an insurance plan.
Brokerage firms should only build policies that will cover them for up to $5 million per claim, at least. Mortgage and brokerage litigation tends to result in astronomical legal fees for both sides. Commercial brokers should obtain a policy that offers up to $10 million annual aggregate coverage.
Optimize Your Legal Team
All brokerage firms should find a policy that gives them dollar one defense with no policy deductible. The quality of your legal defense will largely determine the outcome of litigation. The insurance company should cover all defense costs. This way, your firm will not go bankrupt trying to defend a lawsuit.
Most mortgage and brokerage firms should also try to incorporate full prior acts coverage. Full prior acts coverage will cover your firm for acts that were committed prior to purchasing insurance.
Choose a plan without a retroactive coverage date. You’ll be glad you did. Basically, this will mean that the insurance company will provide coverage for you from the day you started doing business.
Also, check to see if libel and slander claims are excluded. Mortgage brokerage firms are subject to libel and slander suits, so these should be included in your insurance policy. Ensure that mortgage syndication is not excluded, either. It’s very sad when a mortgage company has bought full insurance, but mortgage syndication is excluded. This leaves the firm vulnerable.
You can also check with Standard and Poor’s and other regulatory agencies to make sure that your insurance company is rated highly. Only buy a policy from a well established company, even if that means you have to pay a little bit more.
Balance Deductibles and Premiums
Many mortgage premiums will cost as little as $750 a year. Of course, these plans might not provide adequate coverage. You should balance your premium payments with the amount of coverage you need. This way, you can save money and be covered.
Since mortgage brokerage insurance is very specialized, only hire an insurance company that has comprehensive expertise in the mortgage brokering industry. Only these companies are equipped to handle your company’s security.
Errors and Omissions coverage is always necessary for brokerage firms, but there are special attributes of these policies that must be attended to. Consult with an insurance professional to build a claim that will suit the needs of your brokerage firm. You may be required to complete an exhaustive application, but this is necessary so that you can find a policy that will totally cover your business.
Learn more about business insurance and how to compose a plan that will benefit your brokerage.
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