Debt Collection Agency Insurance Louisiana Policy Information
Debt Collection Agency Insurance Louisiana. If you operate a LA debt collection agency, you provide a very valuable service to the business that you work with; however, you also face a lot of risks.
Collection agencies are retained by clients to collect accounts on which borrowers are delinquent in making payments. Although many collection agents work as subcontractors for their clients, others will purchase bad debt from a business, typically for about 10% of the balance due, and will earn money based on whatever difference they are able to collect.
Collection agencies have several unique and severe exposures, including allegations of personal injury such as libel, slander, and invasion of privacy. The agency must verify that its clients have proper grounds to initiate collection proceedings. Collection agencies must be very careful that their own acts, such as the wording of mailings, language in phone calls, and trespassing when entering the premises of others, are conducted in a legal manner.
Any personal item stored in recovered items must be set aside, secured, and returned to its owner. Recovered vehicles may be stored in a garage or in an open lot outside the building. The recovery company may sell the vehicle on behalf of its lender client. In order to properly protect yourself from these risks, it is absolutely essential that you invest in the right type of Debt collection agency insurance Louisiana coverage.
Debt collection agency insurance Louisiana protects your collections firm from lawsuits with rates as low as $97/mo. Get a fast quote and your certificate of insurance now.
Why Do Debt Collection Agencies Need Commercial Insurance Coverage?
Debt collection agencies work with the public and businesses, and their main job is to collect the money that debtors owe their creditors. While these services are extremely important, they are also risky. Dealing with money in and of itself means that there are a lot of inherent risks that you are faced with. You also have to contend with your clients and ensure that you are providing them with the money that they have hired you to collect.
Lastly, dealing with debtors can lead to a whole host of issues. A client could sue you, stating that you didn't provide the services that you said that you would provide, or they could allege that you embezzled their money. Or, someone that you contact could say that you are harassing them and take legal action against you.
In any of these situations, you could be looking at serious financial trouble. The cost of hiring a legal defense team alone can be astronomical. In the event that you are found liable for any of the claims that may be filed against you, you could be looking at even higher costs. Plus, there are your employees that you have to take into consideration, as well as the property that you operate your debt collection agency out of.
Without debt collection agency insurance Louisiana, you could end up having to pay for these exorbitant costs out of your own pocket, which could be financially crippling. However, if you have the right type of insurance in place, collections agencies can protect themselves from financial devastation.
What Type Of Business Insurance Do Debt Collection Agencies Need?
The specific typed of commercial insurance that LA debt collection agencies require - and the amount of coverage that they need to carry depends on a variety of factors; for example, the location that the agency operates out of, the volume of clients that they work with, the nature of the debts that they are collecting, and the general size of the agency are just some of the factors that will affect the specific debt collection agency insurance Louisiana needs.
However, there are certain types of coverage that all debt collectors require, including:
- Errors and Omissions - Also known as professional liability insurance, or just E&O insurance, this type of policy will protect your debt collection agency, as well as your employees, from any legal claims that clients may make, alleging that you failed to provide the services you said you would provide, or that you were negligent in some way.
- Commercial General Liability - While most people associate liabilities and damages with physical services and products that businesses provide, such as a bad paint job or the installation of the wrong electrical components, damages do happen in the debt collection industry. For instance, if an agent doesn't process a payment correctly and it isn't recorded properly, a client can suffer damages, which you would be held liable for. Additionally, vendors, clients, or other third-parties could sustain an injury on the premises of your debt collection agency. For these types of incidents general liability insurance will cover the cost of any damages and legal issues that may arise.
- Workers Compensation - Most debt collection agencies employ at least a handful of agents, which is why workers' compensation insurance is an absolute must. If an employee suffers an injury while he or she is on the job, this type of coverage will pay for the medical care that is required, as well as any wages that the employ may lose while recovering. It can also assist with legal defense fees, should the employ file a lawsuit.
- Commercial Property Insurance - You'll also need to carry commercial property insurance for your LA debt collection agency. This type of policy covers the physical property of your business, as well as the contents within it; computers, software, phones, etc. If a fire breaks out, a fire system malfunctions and damages electrical equipment, or someone breaks into your company and steals equipment, commercial property insurance will pay for the cost of repairing and replacing the damages and lost or stole equipment.
LA Collection Agencies Risks & Exposures
Premises liability exposure is often minimal since most client contact is done electronically or by mail. If clients visit the premises, they must be kept in designated areas so that they cannot view or overhear conversations regarding others clients' confidential information.
To prevent slips, trips, or falls, all areas accessible to clients must be well maintained with floor covering in good condition. The number of exits must be sufficient, and be well marked, with backup lighting in case of power failure. Parking lots and sidewalks need to be in good repair with snow and ice removed, and generally level and free of exposure to slips and falls. If the collection agency handles repossessions, there may be extensive off-site exposure.
Personal injury exposures are very high and can include allegations of assault and battery, libel, slander, and invasion of privacy. Policies concerning employee conduct should be established with periodic training provided. There is product liability exposure if the recovery company sells repossessed items for its customers.
Professional liability exposure is high because of the confidentiality of client relationships and the various legal aspects of reclaiming clients' property. Collection agencies are subject to very strict regulations imposed by various levels of government. Procedure manuals, letters sent, and phone conversations must all be legal and regularly reviewed to ensure that they comply with the current statute. In the case of repossessions, documentation must include details as to the condition of the property at the time of repossession, since allegations of damage are often made against the collection agent.
Workers compensation exposure is high if collection agents visit the premises of their clients' customers or if any type of repossession is done. Employees should be properly trained and supervised. During the repossession process, borrowers may threaten or physically attack employees. Procedures to avoid and prevent confrontations must be in place. Weapons should not be permitted. All call stations must be ergonomically designed to prevent repetitive motion injuries. Workers can slip and fall, incur back injuries, or be involved in automobile accidents.
Property exposure is generally limited to that of an office. Ignition sources include electrical wiring, heating, and air conditioning systems, wear, and overheating of equipment. If goods are repossessed and stored on premises, each must be separated and categorized for the client. If vehicles are repossessed, gasoline, oils, and lubricants inside the stored vehicles will increase the fire hazard. Necessary protection, often including scheduling specific insurance on the reclaimed property, must be taken for the type of item collected. Recovered property can be targeted for theft and vandalism from angry borrowers.
Appropriate security controls must be taken including physical barriers such as fences or gates, lighting to deter access to the premises after hours, and an alarm system that reports directly to a central station or the police department.
Crime exposure is from employee dishonesty. Records must be kept and receivables regularly accounted for. The hazard is substantially higher if repossessions are made because some goods can be easily converted. Hazards increase without proper background checks, monitoring procedures, and securing all records to prevent unauthorized access. All job duties, such as ordering, billing and disbursing should be separate and reconciled on a regular basis. Receipts should be issued for any cash payments received. Bank deposits should be made on a timely basis to limit the buildup of cash on premises. Regular inventories and audits are very important.
Inland marine exposure is from accounts receivable if the agency offers credit, computers, and valuable papers and records for clients' and borrowers' information. Power failure and power surges are potentially severe hazards. A morale hazard may be indicated if the insured does not keep valuable papers and disks in fireproof file cabinets to protect them from smoke, water, and fire. Duplicates should be kept off site to aid in restoration in the event of a loss.
Business auto exposure is generally limited to hired and non-owned. If vehicles are provided to employees, there should be written procedures in place regarding personal use by employees and their family members. All drivers must have appropriate licenses and acceptable MVRs. Vehicles must be maintained, and records kept in a central location.
If the agency handles repossessions, drivers must be trained in the transport of a variety of goods. Tow truck operators often must act quickly and surreptitiously to remove a repossessed vehicle before the borrower returns. This could result in incorrectly attaching the recovered vehicle to the tow truck. The vehicles may be required to operate quickly in parking lots and other areas where children and other persons may be present, resulting in bodily injury.
If repossessed vehicles are kept on premises, garagekeepers coverage will be needed. Keys to these vehicles should be kept in a locked box inaccessible to non-authorized employees.
LA Collection Agencies Insurance
If you operate a collections agency in LA, making sure that you invest in the right type of insurance coverage is the best way to protect your business from a number of inherent risks. To find out exactly what type of debt collection agency insurance Louisiana you require and how much coverage you need, speak with a reputable commercial insurance broker who knows the debt collection business.
Louisiana Economic Data, Regulations And Limits On Commercial Insurance
If you are a business-minded individual who is either thinking about starting a new business or who wants to expand an existing business by opening a division in a new state, it's important to choose a location that offers favorable conditions.
In business, it doesn't matter how high-quality the products and services you offer are, if the products and services don't appeal to the market, you likely aren't going to succeed. With that said, if you are interested in starting a business in the state of Louisiana, having a basic understanding of the economic trends is important.
It's also a good idea to know what type of insurance you'll need to carry, as certain commercial policies are compulsory in the state.
Below, we provide an overview of economic trends of the Creole State to determine if it's the right location for your operation.
Economic Trends For Business Owners In Louisiana
Unemployment rate is a good indicator of a state's economy. The lower the unemployment rate, the more advantageous the environment will be for prospective business owners. Unfortunately, the unemployment rate of Louisiana is higher than the national average; as of December, 2019, the rate was 4.9%, which was 1.5% higher than the national average of 3.5% at the same time.
Additionally, the unemployment rate has increased; it was 4.3% in July of 2019, 4.5% in October, and 4.7% in November of the same year. However, despite this, the unemployment rate has decreased in recent years, which does show promise for entrepreneurs who are thinking about starting a business in the state.
The best spots to start a business in LA are large cities and the suburban areas that surround them. The following cities have seen the most significant industrial growth:
- Baton Rouge
- Lake Charles
- New Orleans
Businesses in various industries do well in the state of Louisiana; however, there are specific sectors that are seeing substantial growth. Those industries include:
- Advanced manufacturing
- Commercial fishing
- Crude oil
- Natural gas production
- Software development
- Water management
Commercial Insurance Requirements In Louisiana
The Louisiana Department of Insurance regulates insurance in LA. Louisiana mandates very few forms of insurance coverage by law. They enforce worker's compensation.
Louisiana requires you to have worker's compensation insurance if you hire even one employee on a regular basis or must be approved for self-insurance. This includes part-time employees, family members, minors, and immigrant employees. It is not required for independent contractors or domestic employees, though you should check to make sure any contractors you have are true contractors, and not employees.
Louisiana also requires all business-owned vehicles to be covered by commercial auto insurance. Other types of business insurance that business owners should carry depend on the specific industry.
Additional Resources For Professional Services Insurance
Get informed about small business professional services insurance, including Professional liability, aka errors and omissions (E&O insurance), that protects your business against claims that a professional service you provided caused your client financial loss.
- Answering Service
- Armored Car
- Attorney Lawyer
- Background Music Services
- Business Consulting
- Chemical Engineers
- Civil Engineers
- Claims Adjuster
- Commercial Laundries
- Commodity Broker
- Corporate Wellness
- Court Reporter
- Credit Bureaus
- Debt Collection Agency
- Detective Agency
- Diaper Services
- Electrical Engineering
- Environmental Consultant
- Executive, Career & Life Coaching
- Executive Search Firm
- Expert Witness
- Financial Planner
- Financial Services
- Funeral Directors
- HR Consultant
- Inspection Bureaus
- Insurance Agents & Brokers Insurance
- Mediator - Arbitrator
- Medical Billing
- Music, Drama & Dance Therapy
- Office Machine Repair & Maintenance
- Piano Tuners
- Project Management
- Safety Consultants
- Speakers Bureaus
- Temporary Staffing
- Tax Preparer
- Title Abstractors
- Valet Parking
Let's face reality. People today are claims conscious, resulting in a significant share of malpractice lawsuits against professionals.
Liability resulting from the rendering of or the failure to render professional services is excluded in most liability coverage forms. This means that a policy covering a account's or lawyers' office will cover liability arising out of the maintenance or use of the premises, but specifically exclude liability arising out of the rendering of a professional service or the omission of such a service.
In addition to the professions in which actual physical or mental injury may be caused to clients, certain other professions are exposed to claims for malpractice.
Claims may be brought against lawyers, accountants, architects, and similar professional persons for errors or omissions in their professional capacity. Errors & Omissions insurance pays damages that might be awarded to a plaintiff alleging professional negligence.
Professional liability policies are made available to such risks, and these policies provide essentially the same protection as is afforded under the physicians, surgeons or dentists professional liability policy.
Minimum recommended small business insurance coverage: Business Personal Property, Employee Dishonesty, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Employee Benefits Liability, Professional Liability, Umbrella Liability, Hired and Non-owned Auto Liability & Workers Compensation.
Other commercial insurance policies to consider: Building, Business Income with Extra Expense, Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Money and Securities, Special Floater, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage and Stop Gap Liability.
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Also find LA local small businesses by General Liability Class Code and learn about Louisiana small business insurance requirements for general liability, business property, commercial auto & workers compensation including LA business insurance costs. Call us (318) 232-4100.