As a mortgage broker, you’re the crucial link between future homeowners and the financing they need to secure their investment. You know the tricks of the trade – how to get the best rates for your clients, what to look for in a mortgage contract, and when to sign on the dotted line for a life-changing loan.
But, as we all know, the real estate market is far from static. Just look at what happened when the housing bubble burst back in 2008, and what’s happening now with the economic turmoil caused by the Coronavirus pandemic. Staying competitive in such a speculative industry means protecting yourself against a number of risks with business insurance for mortgage brokers.
Here are just 3 reasons why mortgage brokers need business insurance to operate with confidence and peace of mind.
A client claims your financial advice cost them money
The biggest variable in brokering is the professional advice you give. Let’s say that your client comes back and sues you after they go into foreclosure, alleging that you advised them to take on an unreasonable mortgage for their budget. After all, as Investopedia states, the 2008 market crash “revealed that many brokers were getting their clients into mortgages that they could not afford over time.”
Even if a client’s allegations are off-base given the situation, you could find your company tied up in costly litigation that also tarnishes the reputation you’ve worked so hard to build. Luckily, professional liability insurance covers claims of professional negligence, misrepresentation, inaccurate advice, and violation of good faith and fair dealing, per the Insurance Information Institute.
You need proof of insurance to rent a commercial space
If you’re a sole proprietor, you might start out working from home. But eventually, the spare bedroom gets cramped and you want to grow your business in a space that’s more hospitable to hosting clients and expanding your operations. After touring the perfect office space in your city, you’re ready to sign the lease ahead of the competition. But the landlord passes you over because you don’t have liability insurance. You’re back to the drawing board.
General liability insurance is the policy you need. It protects your company (and the owner of the building) against lawsuits stemming from bodily injury or property damage to others on your premises. If a client leaves their appointment only to slip on your staircase, your policy would pay their medical bills, possibly staving off a lawsuit or a hefty bill from the hospital.
Someone steals the electronics from your office
You’re having a real case of the Mondays when you arrive at your office and realize that the space looks oddly empty. That’s when it hits you – your stuff is gone! Someone must have broken into your building during the night. Not only are you down the cost of your specialty electronics, but you’ll also have to put a hold on business while you figure this mess out.
Property insurance with business interruption coverage makes it a lot easier to stay afloat during this tricky time. You can find this coverage in a Business Owners Policy (BOP) bundle along with general liability insurance. Depending on the specifics of the policy, it will cover your property and equipment in the event of a covered disaster (fire, theft, etc.) for Actual Cash Value (ACV) or Replacement Cash Value (RCV), plus help you pay bills during resulting downtime.
Of course, a stolen computer could mean compromised client records full of sensitive personal and financial information. Cyber insurance can help you mitigate the fallout of data breaches resulting from lost or stolen equipment, malicious hacks or unauthorized access to files.