Providing financial services means that another person’s finances and livelihood are in your hands. Whether you are a financial analyst, investment banker, financial adviser, or stock market trader, you have the responsibility of not only helping clients to make good financial decisions, but avoiding hurting them financially. If you work as a financial service professional, it is vital that you protect your business against possible risks associated with this type of work, like getting in the middle of litigation due to poor decision making or negligent errors.
Types of Insurance for Financial Services Professionals
There are a variety of choices when choosing appropriate financial services professionals insurance, each of which cover a different risk that could potentially lead to financial losses or the demise of your business. The following is a list of the most important insurance policies to consider for your type of work:
As a financial service professional, you most likely run your business out of a formal office where you regularly have clients coming in for meetings. General liability insurance is a basic insurance policy that covers any number of liabilities which can occur in your place of business, such as accidents or a result of other unforeseen circumstances. For example, if filing boxes were left out in the hallway and a client trips over them, your business can be sued for medical expenses. General liability insurance protects you from these costs.
Financial Services Professionals Business Owner’s Policy
In order to extend your insurance coverage, you can acquire a business owner’s policy, also known as a BOP. As a comprehensive package policy, a BOP will provide general liability insurance and property coverage along with other additional coverage. Your business will be protected against financial burden as a result of damage to your building from natural disasters or extreme weather conditions, as well as from the loss of valuable paperwork and electronic data files. To illustrate, if there is a fire in your building and your client’s paperwork and contracts is destroyed, the BOP will offer financial protection in order to replace this important paperwork.
Commonly referred to as errors and omissions insurance, professional liability insurance will protect your financial services business from financial strain as a result of professional mistakes. For instance, if you have an employee that handles investment decisions, and per their request, a client made a decision that cost him money, rather than earning a profit, the employee and your business can therefore be responsible for such a mistake. In this case, professional liability insurance would help keep your business afloat as it helps to secure your business finances and cover such costs.
If you have a company vehicle that is used by you or any employee for business purposes, commercial auto insurance is required. In other words, if you drive to meet a client, or to pick up office supplies, and get into an accident on the way, commercial auto insurance helps to cover the cost of vehicle repairs as well as bodily injury sustained by others from the accident.
One type of financial service professionals’ insurance policy you may have not considered is a surety bond. The surety bond guarantees that you will perform the services as detailed in your contract, and many clients prefer to hire financial service professionals who are bonded by a surety bond. By being bonded, you are making a promise to your client that the service outlined in your contract will be performed as requested.
If you run a financial service professionals business and have at least one employee, you are required by state law to obtain worker’s compensation insurance for each employee. In the case of an injury or illness that occurs on the job, the employee will have their medical expenses and income covered by the worker’s compensation insurance. For example, if due to an unforeseen circumstance, there is an accident in the building and an employee is injured in the process, the employee will be covered and the employer will not be sued for damages.
Financial services professionals insurance is an important part of protecting your business from these potential risks, and should be acquired for each risk you feel may be a threat to your company and business assets.