Mortgage Brokerages Insurance – Cost and Types Of Policies

Whenever you budget the expenses of your business, mortgage brokerages insurance must be included in the list because you can’t always know exactly what could happen in the future.

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With the protection provided by insurance against accidents and all the other types 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 mortgage brokerages enterprise, you must consider how much financial risk you are taking on.

Business Insurance for mortgage brokerages

If your mortgage brokerages business runs without proper insurance, you are taking a giant 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 possible, a rough guide to how much you can expect to pay.

The question is, can you afford to NOT have insurance for your mortgage brokerages business?

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

Your mortgage brokerages 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 Montana, 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 claimed.

When you are running your mortgage brokerages operations, you can’t deny responsibility for the results of your actions.

Even more importantly, unless you have spent beforehand the money necessary to have your business running as an LLC, all of that liability belongs to you alone.

What does mortgage brokerages insurance protect you from?

For your mortgage brokerages business, the most important sorts of insurance are intended to cover the risks to your business from accidents, from unexpected events, and from mistakes.

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

In the next few paragraphs, we will describe the most important points any mortgage brokerages business owner should remember when negotiating the insurance needed.

The main headings of insurance for your mortgage brokerages businesses are liability insurance, commercial insurance, asset insurance and workers compensation insurance.

Liability insurance

General liability insurance

Any mortgage brokerages business is dealing directly with customers, and that means you usually have the danger that some accident can happen to them themselves or else something of theirs can be damaged.

In such a case, they can demand compensation.

General liability insurance policy for your mortgage brokerages business insures you against claims coming from injury to visitors or damage to their property.

It protects your mortgage brokerages business from the claims themselves and as well 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 require proper liability insurance.

The normal level of general liability insurance for your mortgage brokerages business would be with a cap of $1 million for a single submission 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 mortgage brokerages insurance operations.

Professional liability insurance for your mortgage brokerages business

In the event where a customer alleges some negligence, errors, or omissions in how you conducted your mortgage brokerages business for them, you can quickly have to fight a court case.

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

Every small mortgage brokerages 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 mortgage brokerages insurance section below for average prices of professional liability insurance for your mortgage brokerages operations.

Product liability insurance

Whatever goods you sell or advice you give about the goods, you are running a risk that buyers may claim that what you delivered 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 responsible for damages caused by products claimed to be defective.

To cover yourself against any likely lawsuit, you need Product liability insurance for mortgage brokerages

Only you can estimate exactly how much insurance you should get.

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

Commercial insurance

Commercial vehicle insurance for your mortgage brokerages business

Be careful! – most policies for private vehicle insurance do not cover any event like theft or accidental damage when the van is being used for business purposes.

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

Also, in case of any accident, the truck itself, the content and any legal bills, medical expenses, and property damage is insured if your car is involved in an accident.

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

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

Tools and Equipment insurance

Since your mortgage brokerages business needs unique and dedicated equipment, you will realize 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 unexpected acts.

Also, 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 must have full-level equipment insurance so that you can immediately buy everything needed to keep your mortgage brokerages business running.

It is difficult to advise how much equipment insurance you need – it’s basically dependent on how much you have invested in your mortgage brokerages business’ equipment.

Commercial Property insurance

Any mortgage brokerages business that owns or rents space in a building must have a commercial property insurance policy.

If you own the building, you probably have a substantial capital investment, along with 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 accidental occurrences like fire and storms, and against deliberate damages like theft and vandalism.

If your mortgage brokerages business works in areas of high risk, like Florida or South Carolina, supplementary coverage may be needed for earthquakes and hurricanes or tornadoes.

In other states like Rhode Island, where intense cold snaps can cause damage to outer coverings of mortgage brokerages business premises, there is a need for more supplementary cover than in warmer climes.

Because the level of cover depends completely 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 mortgage brokerages insurance section below to give some idea of the average prices per million dollars of property insurance for your mortgage brokerages business.

Temporary insurance by month, week or day for your mortgage brokerages business

Is your mortgage brokerages 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 mortgage brokerages – 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 adequate risk cover.

The important feature of short-term insurance is that you purchase the cover for a defined period – a designated 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 mortgage brokerages business

You have the chance to combine a few 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 frequently the right choice for small and medium-sized mortgage brokerages businesses, such as yours.

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

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

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

The usual business that can take out a BOP policy must have fewer than one hundred employees, and maximum five million dollars in annual revenue.

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

Workers Compensation insurance for your mortgage brokerages business employees

In most states, it is mandatory to have workers compensation insurance when your mortgage brokerages business has one or more employees.

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

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

Failure to meet a state’s laws 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 authorize coverage from the government-run monopoly state funds.

In these states, you cannot obtain your workers compensation obligations from private insurance companies.

Workers compensation premiums 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 mortgage brokerages 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 mortgage brokerages businesses needs.

Types of insurance Price range
Commercial insurance $1115 – $2665
Public liability insurance $285 – $760
General liability insurance $700 – $1205
Commercial vehicle insurance $1815 – $2735
Product liability insurance $205 – $895
Equipment insurance $485 – $1005

Cost of insurance for your mortgage brokerages operations depends on many different factors.

We have reckoned these figures for small freelance mortgage brokerages businesses.

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

The location and size and type of your mortgage brokerages 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 mortgage brokerages operations?

This is a wide term used to describe standard insurance policies designed to protect mortgage brokerages business owners from risks like bodily injury, property damage, claims of negligence.

Does my mortgage brokerages business have to have insurance?

Some of the forms 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 mortgage brokerages business insurance policy cover?

Liability insurance provides insurance against lawsuits or claims filed by a customer 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 mortgage brokerages insurance.

How much will mortgage brokerages business insurance cost?

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

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

You can search for more information insurance for mortgage brokerages, in the search box below, and follow the relevant links.

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