As an insurance broker, you work directly with your clients to help them find the best insurance coverage for their needs and budgets. Individuals and businesses depend on you for information about specific policies, what risks they face, and what their coverage options are. Though you are responsible for finding the right insurance policies for your clients, it is a good idea to make sure your own business is appropriately covered as well.

Consider the benefits of having a comprehensive business insurance policy. There are many different types of insurance that are relevant to your business as an insurance broker, most of which you are probably familiar with. An important factor to take into account is that you and your employees work in a professional field, and unlike with a restaurant or clothing store, an error by your colleagues can have serious financial repercussions for your customers.

You may be interested in purchasing insurance for your insurance brokerage if:

• You would like to insure your services and practice against claims of poor performance or errors in your work
• You store sensitive customer or employee data
• Regulations require you to purchase business insurance
• You employ others
• You provide benefits to your employees like health insurance
• You work in an office that you lease or own and store valuable equipment or property in that office
• Customers or clients visit your office

What insurance coverage do I need as an insurance broker?

The most common insurance policies for an insurance brokerage often include policies that apply to all businesses, like general liability insurance. However, many other specific coverages may apply, including professional liability insurance and cyber liability insurance. While there are a number of insurance types to consider, we’ve listed below the major insurance coverages you should consider.

Professional Liability Insurance or Errors and Omissions (E&O) Insurance

Your clients depend on you for sound advice and recommendations on the best insurance coverage that can protect their businesses in times of need. If there’s ever any error or mistake in your work that leaves a client without sufficient coverage or in financial trouble, you and your firm could be held liable. Professional liability insurance protects you from lawsuits, whether or not your company is at fault, resulting from your professional work as an insurance broker. Covered areas for professional liability insurance include negligence, misleading statements, performance, and breach of duty.

Examples:

• Errors/Negligence: One of your brokers recommends a client purchase a $2M/$3M general liability policy for his construction business. When getting quotes for the policy, however, your broker accidentally uses a $1M/$2M limit. The client ends up purchasing the lower limit. When the client is later faced with a $3M lawsuit over bodily injury, his policy is unable to meet the high amount of damages. He sues your firm.
• Misleading statements: You recommend a specific commercial property policy for your client’s Florida-based restaurant chain. One of your employees mistakenly tells him that floods are a covered peril in the policy. After a severe hurricane hits and two of your client’s restaurants are flooded, he finds out that his policy doesn’t cover the hundreds of thousands of dollars in flood damage his restaurants suffered. He sues your firm.
• Lawsuit without merit: A civil engineering firm purchases general liability insurance from your brokerage firm. Someone sues them for bodily injury, and the total amount they win exceeds the engineering firm’s insurance limit. The engineering firm must cover the rest of the cost. They now want to sue your brokerage firm because they thought they would never have to pay anything out of pocket.

General Liability Insurance

General liability insurance can help protect your insurance brokerage firm from the financial burden of a lawsuit that is unrelated to your professional work. If your insurance brokerage or one of your employees injures a third-party in the course of business, liability insurance can help protect your business against the financial consequences of lawsuits. The four types of coverage that are included in general liability insurance are: products & completed operations, property damage, bodily injury, and personal & advertising injury. General liability also covers the costs of any legal defense or attorney’s fees incurred while defending against covered lawsuits.

Examples:

• Property Damage: A client comes into your office sporting a brand new designer watch. Before a meeting with one of your brokers, he helps himself to the espresso machine in your break room. Unfortunately, a part of the machine breaks off, exposing a sharp edge. This sharp edge scratches his watch, destroying the face. He sues you for the cost of replacement.
• Bodily Injury: An intern is carrying a set of 10-pound hand weights meant for an office exercise program and trips on a small table in the waiting room. The hand weights land on a client’s foot, breaking it. She sues you for medical expenses.
• Advertising Injury: You have an idea for a magazine ad starring a giant fish that looks suspiciously similar to the giant fish mascot of your competitor. They sue you because they believe that your print ad is too similar to a commercial they ran on TV last year.

Commercial Property Insurance

If there is extensive physical damage to property or equipment that you lease or own, the expense of replacing it can negatively affect your bottom line. Commercial property insurance protects you from these costs, by paying for you to replace or rebuild damaged items or structures. The included damage can happen to a building or item that you rent, lease, own, or have borrowed from someone else. Covered items include, but are not limited to: paintings, furniture, office equipment, and computers.

Examples:

• Buildings: One of your employees brings in a hotplate and leaves it running in the office kitchen while he goes into a coworker’s office. The hot plate catches fire. Half the kitchen is burned to a crisp before anyone notices, and many appliances need to be replaced.
• Contents: Your business is so successful you have an ivory sculpture of a dragon in the lobby. One night, thieves break into your office and steal it the sculpture. They also get away with an additional $20,000 worth of property.
• Property of Others: Your copier breaks down and you are forced to borrow a machine from a neighboring business. One of your employees accidentally sets off a fire alarm by attempting to grill steak in the office kitchen. Water rains from the sprinklers for 10 minutes before they are shut off, leaving the borrowed copier soaked and damaged.

Cyber Liability Insurance

As an insurance broker, you store valuable and sensitive data on your clients. From information about business financials to client contact information, much of this data is likely stored on a computer or a network. That’s why it’s especially important to guard your business against the negative impact of any technological mishaps. Cyber liability insurance can protect you from the financial consequences of hacking, viruses, data breaches, and other cyber perils.

Cyber liability insurance also covers the costs of:

• Lawsuits against you for lost data
• Notifying customers and business partners about a data breach
• Marketing to restore your reputation
• Lost income
• Lost or damaged electronic data

Example:

• You keep records of your clients’ business financials. Hackers break into your company network and steal this confidential data. Your clients sue your firm for mishandling their information.

Business Owner’s Policy

A business owner’s policy, also known as a “BOP,” can cover risks that are common to all business owners. A BOP combines the major property and liability risks that small businesses face into one convenient package. It also helps you save money, with lower premiums than buying the individual coverages separately. This type of policy usually bundles together general liability, property insurance, and business income insurance into a single policy.

Final Word

As an insurance broker, you have a duty to put the interests of your customers first. The intricacies of modern insurance require a trained eye, which is why your clients rely on you to communicate information about their policy specifics and help them find the right coverage for their needs. As an insurance professional, you are well aware of the risks of running a business, and you are cognizant of the fact that life doesn’t always go according to plan. The same problems that can plague your clients’ businesses can also affect you. That’s why it’s wise to invest in a comprehensive business insurance package that protects you against many of the liabilities that you face in your day-to-day business operations.