Debt Collection Agencies Insurance – Cost and Coverage

Whenever you budget the expenses of your business, debt collection agencies insurance must be included in the list because you can’t always know exactly what is going to happen in the future.

With the protection provided by liability insurance and all the other kinds of insurance we will tell you about, you can protect your business and yourself in case something unforeseen happens.

Like any business owner, for your debt collection agencies enterprise, you must consider how much financial danger you are taking on.

If your debt collection agencies business runs without proper insurance, you are taking an enormous chance not just of losing some money but of a final wipe-out.

This is because the laws in every state are very strict in enforcing liability on the owners of businesses for the upshots of their actions. 

In this article, we are giving very general guidelines for startup businesses to explain what the main kinds of insurance that you need are, and where available, a rough guide to how much you can expect to pay.

The question is, can you afford to NOT have insurance for your debt collection agencies business?

What this means, for any debt collection agencies business owner, is that if some person claims that your business caused them some physical or economic damage, a court can award damages far beyond the total size of your business.

Your debt collection agencies business is not harbored by laws in the same way as states are, where edicts can place a “cap” on the maximum level of liability.

In some states, like New Jersey, there are specific monetary levels that limit the amount an adjudicator can award in any case against the state.

In a court case, it’s purely the privilege of the jury to award whatever amount they deem appropriate, even sometimes giving a claimant more than they have sort.

When you are running your debt collection agencies operations, you can’t escape responsibility for the outcomes of your actions.

Even more importantly, unless you have spent up-front the money necessary to have your business running as a corporation, all of that liability belongs to you alone.

What does debt collection agencies insurance protect you from?

For your debt collection agencies business, the most important kinds of insurance are intended to cover the risks to your business from accidents, from unexpected events, and from mistakes.

In addition there are some official kinds of insurance that various states require.

In the next few paragraphs, we will explain the most important points any debt collection agencies business owner should consider when negotiating the insurance needed.

The main types of insurance for your debt collection agencies businesses are liability insurance, commercial insurance, asset insurance and workers compensation insurance.

Liability insurance

General liability insurance

Any debt collection agencies business is dealing directly with customers, and that means you always have the danger that some accident can happen to them bodily or else something of theirs can be ruined.

In such a case, they can require compensation.

General liability insurance policy for your debt collection agencies business covers you against claims coming from injury to clients or damage to their property.

It protects your debt collection agencies business from the claims themselves and also to any follow-on court costs and legal fees of the lawsuits.

In many cases, it should help you to qualify for extra business from city and state organizations, where contracts insist on proper liability insurance.

The usual level of general liability insurance for your debt collection agencies business would be with a upper limit of $1 million for a single claim and a total of $2 million for the whole year.

See the table in the costing section below for average prices of general liability insurance for your debt collection agencies insurance operations.

Professional liability insurance for your debt collection agencies business

In the event where a customer alleges some negligence, errors, or omissions in how you conducted your debt collection agencies business for them, you can quickly be involved in a monetary claim.

Even if the case against you is ruled in your favor, the cost of defense can be large, and the impact on your reputation can be damaging.

Almost all small debt collection agencies business should have enough professional liability insurance to cover an individual claim of $25,000, with annual cover of $50,000.

See the table in the cost of debt collection agencies insurance section below for average prices of professional liability insurance for your debt collection agencies operations.

Product liability insurance

Whatever goods you sell or advice you give about the goods, you are running a risk that customers may claim that the results didn’t meet your description of function, or that your recommendation was basically incorrect.

You need to understand the specific laws of product liability in your own state.

For example, in California, all businesses in the supply chain can be held liable for results caused by products claimed to be defective.

To cover yourself against any likely lawsuit, you need Product liability insurance for debt collection agencies

Only you can estimate exactly how much insurance you must have.

Best advice is to contact experienced insurance agents, brokers or company representatives for guidance.

Commercial insurance

Commercial vehicle insurance for your debt collection agencies business

Beware! – almost all policies for private vehicle insurance do not cover any occurrence like theft or accidental damage when the van is being used for business purposes.

The right way to make sure that your vehicle is insured for both its own value, and the valuable contents, is by taking out a designated commercial vehicle insurance package.

Commercial van policies insure the value of any vehicle in case of accident, malicious damage, fire, or theft.

In addition, in case of any accident, the van itself, the content and any legal bills, medical expenses, and property damage is covered if your van is involved in a crash.

Most states, other than Virginia and New Hampshire, insist on this type of insurance.

The wanted value of the insurance is worked-out for the depreciated value of the vehicle, and your requested level of cover of contents. 

Tools and Equipment insurance

Since your debt collection agencies business needs specific and dedicated equipment, you know how much it can cost to replace it in case of any damage, loss, or theft.

The gear may be subject to malicious damage, deliberate fire, theft, other such unpredicted acts.

As well, acts of nature like lightning strikes, hurricanes, earthquakes, and other highly damaging natural events can wipe-out your whole business in one stroke.

Unless you can afford to immediately replace such unique gear quickly out of your own pocket, you need full-level equipment insurance so that you can immediately buy everything needed to keep your debt collection agencies business running.

It is difficult to advise how much equipment insurance you need – it’s essentially dependent on how much you have invested in your debt collection agencies business’ equipment.

Commercial Property insurance

Any debt collection agencies business that owns or rents space in a building needs a commercial property insurance policy.

If you own the space, you may already have a substantial capital investment, in addition to a big liability if there’s a mortgage.

Your physical building location should carry insurance coverage for the value of the premises and contents against accidental occurrences like fire and storms, and against criminal damages like theft and vandalism.

If your debt collection agencies business works in areas of high risk, like California or Georgia, supplementary coverage may be needed for earthquakes and hurricanes or tornadoes.

In other states like Illinois, where extreme cold snaps can cause damage to outer coverings of debt collection agencies business premises, there is a need for more supplementary cover than in warmer climes.

Because the level of cover depends mainly on the value of the property, it’s not possible to say what cover your need, but we have been able in the table in the cost of debt collection agencies insurance section below to give some idea of the average prices per million dollars of property insurance for your debt collection agencies business.

Temporary insurance by month, week or day for your debt collection agencies business

Is your debt collection agencies business working part-time or casually, or is the level of business seasonal?

Using short-term insurance makes perfect sense. Business insurance by the month, day, or week – temporary insurance for debt collection agencies – are special policies where you can cover a nominated period when you want to be covered.

By only paying for that period of cover, you will save by having reduced premiums but still having the same risk cover.

The important feature of short-term insurance is that you pay for the cover for a defined period – a nominated date, or a week or month starting on a specific date, for example for 30 days beginning on the specified date.

When you are expecting periods of higher business activity, get the existing cover improved.

Talk to your insurance agent, broker or the company’s representatives to see what options you have.

Business Owners Policy BOP for your debt collection agencies business

You have the chance to combine most of the important kinds of small business insurance in one policy that is known as the business owner’s policy – BOP.

A BOP merges commercial property and public liability insurance by packaging these coverages into one insurance policy, which can save you money.

BOP insurance will shield you if any claims of injury or property damage are made.

It is frequently the right choice for small and medium-sized debt collection agencies businesses, such as yours.

There are a few limits that will rule whether BOP is suitable for your own business.

BOPs do not cover your professional liability or commercial vehicle cover.

Also, the size of your business will rule whether you are allowed to take out BOP cover.

The usual business that is allowed to take a BOP policy must have less than one hundred employees, and not more than five million dollars in annual sales.

As well, you must separately take out the necessary worker’s compensation, health and disability insurance as determined for your state.

Workers Compensation insurance for your debt collection agencies business employees

In almost all states, it is mandatory to have workers compensation insurance when your debt collection agencies business has one or more employees.

Workers compensation insurance covers the operation against any costs that arise if any hired hand experiences an injury or becomes sick as a result of work.

The benefits include medical expenses, death benefits, lost wages, and vocational rehabilitation.

Failure to meet a state’s requirements in this regard can leave you as the employer required to pay penalties levied by the states.

Some states, such as North Dakota, Ohio, Washington, West Virginia, and Wyoming only permit coverage from the government-run monopoly state funds.

In these states, you may not get your workers compensation obligations from private insurance companies.

Workers compensation premiums are calculated based on the employee’s pay, and usually come out at around $1.00 per $100 per month.

However, you must see the relevant authorities in your state.

Average costs of these types of insurance

Although every debt collection agencies insurance level is unique, there are enough examples of standard quotes from insurance companies for us to give rough guidelines, including what are the cheapest rates offered.

Of course, you should always check with a broker what’s relevant for your business.

The list below is of annual premiums we have collected for the main types of insurance your debt collection agencies businesses needs.

Cost of insurance for your debt collection agencies operations depends on many different factors.

We have reckoned these figures for small independent debt collection agencies businesses.

In larger states like Texas, premiums are generally about 20%-30% higher than national averages, whereas in smaller states like Utah, they can be about 20%-30% cheaper.

The location and size and type of your debt collection agencies business can have a big effect on the cost of different policies.

You should discuss with professional insurance agents and brokers, or insurance company representatives.

Also you can let the internet do the work for you by looking for insurance companies near where your business is located.

Another useful source of information is the local Better Business Bureau in your town.

FAQ

What is small business insurance for debt collection agencies operations?

This is an umbrella term used to describe common insurance policies designed to protect debt collection agencies business owners from risks like bodily injury, property damage, claims of negligence.

Does my debt collection agencies business have to have insurance?

Some of the forms of insurance are not mandatory for you to open your business, but they can protect you from risks in your business operations.

Some other forms are required by state law, such as workers compensation and vehicle insurance.

What does a small debt collection agencies business insurance policy cover?

Liability insurance provides coverage against lawsuits or claims filed by a customer for bodily injury, property damage, or negligence.

The specific cover will vary based on your own operations.

See the table in the costing section above for average prices of the recommended policies for debt collection agencies insurance.

How much will debt collection agencies business insurance cost?

As well as the size of the business, some other factors, such as location and claims history, are used to determine your policy’s cost.

You should discuss with professional insurance agents and brokers, or insurance company representatives.

You can search for more information insurance for debt collection agencies, in the search box below, and follow the relevant links.

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