Debt Collection Agency Insurance – Cost and Coverage

Whenever you budget the expenses of your business, debt collection agency insurance must be high on the list because you can’t always know exactly what could happen in the future.

With the protection provided by liability insurance and all the other sorts 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 agency enterprise, you must consider how much financial risk you are taking on.

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

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

In this article, we are giving very general guidelines for small businesses to explain what the main kinds of insurance that you need are, and where possible, 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 agency business?

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

Your debt collection agency business is not harbored by laws in the same way as states are, where laws 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 a court can award in any case against the state.

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

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

Even more importantly, unless you have spent in advance the money necessary to have your business running as a limited liability company, all of that liability belongs to you as an individual.

What does debt collection agency insurance protect you from?

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

As well there are some legal kinds of insurance that various states require.

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

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

Liability insurance

General liability insurance

Any debt collection agency business is dealing directly with other people, and that means you usually have the danger that some accident can happen to them bodily or else something of theirs can be spoiled.

In such a case, they can require compensation.

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

It protects your debt collection agency business from the claims themselves and in addition to any resulting court costs and legal fees of the lawsuits.

In many cases, it can also help you to qualify for extra business from city and state organizations, where contracts demand proper liability insurance.

The usual level of general liability insurance for your debt collection agency business would be with a boundary of $1 million for a single event 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 agency insurance operations.

Professional liability insurance for your debt collection agency business

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

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

Most small debt collection agency 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 agency insurance section below for average prices of professional liability insurance for your debt collection agency operations.

Product liability insurance

Whatever goods you sell or advice you give about the goods, you are running a risk that clients may claim that what you delivered didn’t meet your description of function, or that your guidance 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 responsible for injuries caused by products claimed to be defective.

To cover yourself against any possible lawsuit, you need Product liability insurance for debt collection agency

Only you can estimate exactly how much insurance you need.

Best advice is to talk to experienced insurance agents, brokers or company representatives for help.

Commercial insurance

Commercial vehicle insurance for your debt collection agency business

Be careful! – almost all policies for private vehicle insurance do not cover any occurrence like theft or accidental damage when the vehicle 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 direct commercial vehicle insurance package.

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

As well, in case of any accident, the van itself, the content and any legal bills, medical expenses, and property damage is guaranteed if your truck is involved in a crash.

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

The necessary value of the insurance depends on the depreciated value of the vehicle, and your requested level of cover of contents. 

Tools and Equipment insurance

Since your debt collection agency business needs unique and expensive equipment, you will realize how much it can cost to replace it in case of any damage, loss, or theft.

The equipment may be subject to malicious damage, deliberate fire, theft, other such unforeseen acts.

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

Unless you can afford to immediately replace such specific gear quickly out of your own pocket, you need full-level equipment insurance so that you can immediately buy any equipment needed to keep your debt collection agency 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 agency business’ equipment.

Commercial Property insurance

Any debt collection agency business that owns or rents space in a building must have a commercial property insurance policy.

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

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

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

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

Whereas the level of cover depends entirely 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 agency insurance section below to give some estimate of the average prices per million dollars of property insurance for your debt collection agency business.

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

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

Using short-term insurance makes good sense. Business insurance by the month, day, or week – temporary insurance for debt collection agency – are special policies where you can cover a designated 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 identical risk cover.

The essential feature of short-term insurance is that you pay for the cover for a defined period – a specific 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 raised.

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 agency business

You have the choice 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 amalgamating these coverages into one insurance policy, which can save you money.

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

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

There are some limits that will dictate whether BOP is suitable for your own business.

BOPs will not cover your professional liability or commercial vehicle risks.

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

The normal business that is eligible for a BOP policy must have less than one hundred employees, and maximum five million dollars in annual turnover.

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

Workers Compensation insurance for your debt collection agency business employees

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

Workers compensation insurance covers the enterprise against any costs that arise if a worker 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 regulations in this regard can leave you as the employer having 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 cannot take out your workers compensation obligations from private insurance corporations.

Workers compensation charges are computed 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 agency insurance requirement is unique, there are enough examples of average quotes from insurance companies for us to give approximate 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 gathered for the main types of insurance your debt collection agency businesses needs.

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

We have estimated these figures for small independent debt collection agency businesses.

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

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

You should talk to 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 reliable source of information is the local Better Business Bureau in your suburb.

FAQ

What is small business insurance for debt collection agency operations?

This is a general term used to describe basic insurance policies designed to protect debt collection agency business owners from risks like bodily injury, property damage, claims of negligence.

Does my debt collection agency business have to have insurance?

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

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

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

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

The precise cover will vary based on your own operations.

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

How much will debt collection agency business insurance cost?

On top of the size of the business, several other factors, such as location and claims history, are used to determine your policy’s cost.

You should talk to professional insurance agents and brokers, or insurance company representatives.

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

Related Industries:

Debt Collection Agencies Insurance – Cost and Coverage Debt Relief Services insurance – cost and coverage Debt Collector insurance – cost and coverage Garbage Collection insurance – what kind and at what cost Collection Manager insurance – cost and types of policies Collection Specialist insurance – cost and types of policies Collection Supervisor insurance – cost and types of policies Collection Analyst insurance – what kind and at what cost Detective Agency Insurance – Cost and Coverage Agency Counsel Insurance – Cost and Coverage Travel Agency insurance – what kind and at what cost Talent Agency Insurance – Cost and Types Of Policies