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Hawaii Finance Company Insurance Policy Information

HI Finance Company Insurance

Hawaii Finance Company Insurance. Finance companies are an increasingly popular option among private individuals and businesses seeking loans.

Finance companies are financial institutions that accept monetary deposits from banks and other money market sources and use those funds to make loans to individuals and businesses for a variety of installment sales such as automobiles, boats, or equipment.

They may be affiliated with a manufacturing firm, such as an automobile manufacturer, and finance installment sales solely for that firm's products. Finance companies earn income from interest charged on loans, profits from investments, and transaction fees.

They may also service escrow accounts, may be involved in real estate services and transactions, or broker and sell loans to other operations.

While consumer finance companies and sales finance companies represent an alternative avenue to obtain short-term loans to individuals and commercial ventures respectively, finance companies can also be associated with larger parent companies.

Because of the nature of their work, finance companies are well-versed in risk assessment and management - but the fact remains that finance companies, too, can find themselves facing circumstances beyond their control.

That is why it is crucial for these businesses to protect their interests with outstanding insurance coverage. What types of Hawaii finance company insurance are needed? Read on to learn more.

Hawaii finance company insurance protects your financing and loan business from lawsuits with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.

Why Do HI Finance Companies Need Insurance?

Finance companies should carry comprehensive insurance primarily because they, like any other business, are vulnerable to a wide range of hazards.

The risks finance companies face include universal risks as well as threats unique to this branch of commerce, and while not every eventuality is insurable, many of the perils that can take down a business are.

A finance company's commercial premises could, for example, be impacted by an act of nature - like a wildfire, earthquake, or hurricane. Theft, vandalism, and accidents can strike almost any business.

Without the right Hawaii finance company insurance, the resulting losses could easily be so extensive that the company would go bankrupt, but equipped with excellent coverage, these challenges can be overcome.

Liability risks represent the other major category of concern. An employee could sustain a work-related injury, a third party, such as a client or vendor, could be hurt on the premises, or a HI finance company could face a lawsuit alleging negligent work. The legal costs that can arise from liability risks can, again, be massive.

The term "unforeseen circumstance" exists with good reason - it is impossible to predict when a major peril will impact your business, and even with the most effective precautions, mishaps may not be preventable. Finance companies that have invested in top-notch insurance will never have to worry that they are unprepared.

What Type Of Insurance Do Hawaii Finance Companies Need?

The precise types of coverage that will best protect a finance company against financial losses, as well as the cost of insurance, depends on numerous factors.

The location of the company, the size of the business, and the number of employees are merely some examples of the variables that influence a finance company's insurance needs.

For this reason, it is imperative to consult a skilled commercial insurance broker, who will create the best possible insurance plan. With that in mind, here is a look at the essential types of Hawaii finance company insurance that are usually needed:

  • Commercial Property - This type of Hawaii finance company insurance is designed to help businesses manage events in which their commercial premises are damaged, such as theft, vandalism, and natural disasters. The building is covered, alongside many of its contents, such as furniture and computers, and that means your insurance will pay for repair and replacement costs. With additional business interruption coverage, it is additionally possible to recover some of the revenue lost to temporary business closures resulting from the peril.
  • Commercial General Liability - Should a finance company face a third party property damage or bodily injury claim, commercial general liability insurance pays for a significant portion of the associated legal costs, whether they arise in the form of attorney fees or settlement payments. This form of coverage is an essential part of any company's legal defense plan.
  • Errors And Omissions - Also called professional liability insurance, E&O coverage shields your company from the legal costs associated with allegations that it was professionally negligent in carrying out its work.
  • Workers Compensation - Even in companies where the majority of employees carry out administrative tasks, workers can be injured on the job. Should this happen, workers comp covers their medical costs, but also reimburses their lost wages if they are rendered unable to return to work for a time.

While these examples of coverage that should carried will get your business closer to being fully insured, be aware that you may require additional forms of Hawaii finance company insurance.

To discover more, discuss your unique circumstances with a skilled commercial insurance broker.

HI Finance Companies' Risks & Exposures

Premises liability exposure comes from slips and falls due to public access to the premises. Customer safety and security are very important. Floors, stairs, and elevators need to be in good condition, with steps and uneven floor surfaces prominently marked. The number of exits must be sufficient and well-marked, with backup lighting in the event of a power failure.

Steps should have handrails, be well-lighted, marked, and in good repair. 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. There should be security in the parking lot equal to or better than the surrounding area.

Personal injury exposure arises from breaches of customers' privacy and confidentiality of their financial records and discrimination in lending practices.

Product liability exposure is very low as financial products sold to customers are intangible. There may be some minor exposure if the company sells items like tee shirts or advertising novelties or offers small gifts to customers as a reward for doing business with them.

Directors' and officers' exposure can be substantial due to competing priorities of numerous stakeholders such as stockholders, bondholders, depositors, loan holders, employees, and regulators. Directors and officers are more likely to be sued for results of their decisions in times of economic downturn and well-publicized excesses within the financial services industry.

Finance companies may offer escrow fund handling and other financial activities. Directors and officers can be sued if funds from any of these are mismanaged. Officers must be thoroughly knowledgeable about the finance business, able to operate competitively while maintaining profitability, and able to oversee ongoing operations effectively.

Directors should include representation from a wide variety of business interests with no conflicts of interest.

Errors and omissions exposures from accountants and auditors can cause significant loss. There must be checks and balances in place to quickly catch and fix errors that are made. The background and training of all professional-level employees must be thorough and continual to keep up-to-date with industry changes. Monitoring is necessary.

The loan handling, record keeping, and accounting of the inflow of payments from customers is an area to review. If the finance company services mortgages, they must verify that all mortgaged properties have hazard insurance. A mortgage errors and omissions policy provides blanket coverage for any inadvertent omission.

Workers compensation exposure exposures are generally light as finance companies are less visible and less attractive for holdups than other financial institutions. As most work is done on computers, employees are exposed to eyestrain, neck strain, and repetitive motion injuries including carpal tunnel syndrome. All workstations should be ergonomically designed to reduce the chance of such injury.

Property exposures are primarily from fire due to the electrical wiring for computers, printers, and other electronic office equipment, heating, and air conditioning systems. All wiring must meet current codes, be well maintained, and be adequate for the company's operations.

Circuitry on electronic equipment may be easily damaged from smoke, water, and heat, which will cause a total loss even with a small fire. Extra expense coverage should be considered as the finance company must continue operations after a loss.

Crime exposure is primarily from employee dishonesty, either from the theft of cash or from the improper transfer of funds held for customers. Finance companies need a Financial Institutions Bond to cover these exposures. Background checks should be conducted for anyone who will have access to the accounts. There must be regular monitoring and auditing of the books by outside auditors to prevent and identify problems.

All employees must take at least one continuous week of vacation a year. Controls and programming to prevent computer fraud should be reviewed. Extortion is a growing concern due to the high value of assets held by these companies.

Inland marine exposures are from accounts receivable for billings to customers, computers for tracking financial data, and valuable papers and records for customers' and regulatory information. Backup copies of all records, including computer records, should be made and stored off premises for ease of restoration in the event of a loss.

Business auto exposures may be limited to hired and non-owned for employees running errands. If vehicles are provided to officers or key employees, policies should be in place for personal and permitted use of the vehicles. Any driver must have a valid driver's license and acceptable MVR. Vehicles must be well maintained with records kept in a central location.

Hawaii Finance Company Insurance - The Bottom Line

To learn more about the specific types of Hawaii finance company insurance policies you'll, what limits to consider and the associated premiums, consult with a reputable broker that is experienced in commercial insurance.

Hawaii Economic Data, Regulations And Limits On Commercial Insurance

Made In Hawaii

Location is one of the most vital factors that prospective business owners need to take into consideration when they are thinking about establishing an operation. You can have the best possible products and offer the most exceptional services, but if the location doesn't offer a market that can benefit from those goods and services, your business will have difficulty thriving.

As such, if you are an entrepreneur who has set your sights on Hawaii for the headquarters of your business or a new division of an already existing corporation, it's a good idea to familiarize yourself with the state's economic data. It's also important to understand what type of commercial insurance you will need to invest in to protect yourself, your employees, your vendors, and the clients you serve.

Below, we provide a brief overview of important economic data and the commercial insurance requirements for business owners in the Aloha State.

Economic Trends For Business Owners In Hawaii

A state's unemployment rate is a good indicator of the overall economy of the region. It indicates that there are enough jobs available to support the economy, which is a direct reflection of the success of businesses in the state. As of 2019, the Bureau of Labor Statistics indicated that the unemployment rate in Hawaii was 2.6%, 0.8% lower than the national average of 3.4% from the same timeframe. This rate has also decreased throughout 2019, as it was 2.8% in July of 2019.

As with most states, the best locations to start a business in the state of Hawaii include urban areas and the suburban regions that surround them. The top cities for business owners in HI include:

  • Hilo
  • Kahului
  • Waipahu
  • Pearl City
  • Kaneohe

While several industries do well in Hawaii, certain sectors thrive. Tourism has long been the leading industry in the state, as people from around the globe flock to Hawaii each year.

Agriculture is also a booming industry here; the state is the second largest producer of sugar can in the U.S. Defense is also a key sector here, as all branches off the armed forces have bases located in the state. Another industry that also thrives here is manufacturing; specifically the manufacturing of cotton-based goods, such as clothing.

Commercial Insurance Requirements In Hawaii

The Hawaii Department of Commerce and Consumer Affairs regulates insurance in HI. Hawaii mandates very few forms of insurance coverage by law. They enforce worker's compensation.

Hawaii requires you to have worker's compensation insurance if you hire even one employee on a regular basis. 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.

Hawaii 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 Financial Institutions Insurance

Discover the types of commercial insurance that banks, finance companies and other financial institutions need to protect their asset management, deposit, lending, investment and other operations.


Financial Institution Insurance

Financial institutions handle, receive, disburse, and invest money of others.

They are subject to regulations specific to their operation but they are also subject to legal and moral obligations for their customers.

Customers entrust their funds to these institutions because of their confidence in the management's ability.

Insurance is a necessary means to protect the financial institutions and their customers against various types of losses.

The financial services offered and the personal relationships created by the institution can only be protected through the use of a sound insurance program and appropriate bonding practices.

Minimum recommended small business insurance coverage: Business Personal Property, Extra Expense, Equipment Breakdown, Financial Institutions Bond, Accounts Receivable, Computers, Valuable Papers and Records, General Liability, Directors' and Officers' Liability, Employee Benefits, Fiduciary Liability, Professional, Umbrella, Hired and Non-Owned Auto, Workers Compensation & Surety Bonds.

Other commercial insurance policies to consider: Buildings, Earthquake, Flood, Leasehold Interest, Real Property Legal Liability, Computer Fraud, Extortion, Fine Arts, Signs, Cyber Liability, Employment-related Practices, Law Enforcement Professional, Business Auto Liability and Physical Damage And Stop Gap Liability.


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