Maryland Mortgage Broker Insurance Policy Information
Maryland Mortgage Broker Insurance. Mortgage companies are financial institutions that lend funds for purchases of residential and business real estate. The mortgage is paid back over time with interest until the loan is paid off and the purchaser owns the property. If the money is not paid back, the mortgage company can foreclose on the loan and sell the property to recoup their investment.
Mortgage companies earn income from interest charged on loans, profits from investments, and transaction fees. They also service escrow accounts, may be involved in real estate services and transactions, or broker and sell mortgage loans to other operations. Mortgage companies are subject to both federal and state regulation.
Mortgage brokers assist their customers acquire their own homes. Your clients depend on you to guide them from any complications that arise in the mortgage process and trust you to give them the best possible deal on their loans. If you make professional mistakes, your clients may sue your brokerage company for financial loss and hardship you caused.
Protect your brokerage company from potential risks as well as other business risks with Maryland mortgage broker insurance.
Maryland mortgage broker insurance protects your loan business from lawsuits with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.
Why Insurance Is Important for Mortgage Broker Firms
Below is a list of the most commonly purchased insurance policies by MD mortgage brokers. These primary policies can be tailored to suit the needs of your mortgage brokerage business. That way, you end up with a customized Maryland mortgage broker insurance plan - with no unneeded coverage and no extra fees:
Professional Liability: Professional liability also know as errors and omissions (E&O) coverage protects mortgage brokers from claims made against them for negligence while in the process of providing their services. Even if you are the most careful broker, you can have allegations made against you which could leave you in a difficult situation financially if you are not protected. Mortgage brokers may be sued as a result of advice on:
- Mortgage Brokering
- Finance Brokering
- Debt Management Services
- Mortgage Origination
- Mortgage Aggregation Services
General Liability: General liability will cover your firm for a variety of claims including bodily injury, property damage, personal injury, injury to a third party and other accidents that commonly arise when providing your services. These accidents could be as simple as slipping on a wet floor or dropping your computer monitor when moving desks. When accidents happen Maryland mortgage broker insurance should cover it.
Workers Compensation: This provides insurance to employees who are injured when working on your firm. It provides wage replacement and medical benefits to them. In exchange for these benefits, the employee gives up his rights to sue you for the incident. State laws will vary, but most states require you to have workers compensation if you have employees.
Directors and Officers Liability: Corporate transparency and accountability are critical to your brokerage firms success. With regulatory mandates and shareholder activism making social media and headline news, each decision your directors and officers make can quickly be judged under the public microscope. If a worst-case situation arises, your firm may face litigation as a direct result of your boards decisions. Directors and Officers Insurance will cover the legal costs to defend the individual directors and officers.
Commercial Property: Depending on your location, your brokerage firms office is exposed to many types of risks, including fire, flood, natural disasters, and extreme weather conditions like snowstorms or hail storms. Aside from taking necessary steps to protect your brokerage firm you should also be prepared for events you can't prevent. Do this by getting Maryland mortgage broker insurance. A property policy covers buildings and personal property owned by your business. It also covers property owned by others that you use in your business. This way your buildings and contents are covered which reduces the loss of your business assets.
There are two types of commercial property insurance: all-risk and peril-specific. An all-risk policy will cover a large range of incidents except for those noted in the policy. A peril-specific policy will cover any incidents that are listed in the Maryland mortgage broker insurance policy.
Business Owners Policy (BOP): If you have a MD small business and don't want to buy all insurance coverages separately, you can opt for this package, which combines typical coverages into one standard package. It is offered at premiums lower than if each coverage was purchased separately. Typically, BOPs consist of property, general liability, vehicles, business interruption and other types of coverages for risks common to brokerage businesses.
Umbrella Policy: Umbrella liability provides extra peace of mind for you and your firm. It covers losses above and beyond those of underlying policies such as general liability insurance. As an added benefit, coverage afforded by umbrella insurance is sometimes broader than that of underlying policies.
MD Mortgage Banking's Risks & Exposures
Premises liability exposure is limited if the mortgage company carries out all transactions over the phone or at the client's business, home, or other locations. If clients do come to the premises, the condition of the area open to the public is a prime concern as visitors may be injured from slips or falls. Floors 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.
Directors' and officers' exposure can be substantial due to competing priorities of numerous stakeholders including stockholders, bondholders, depositors, mortgageholders, 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. Mortgage 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 mortgage lending 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 are possible during any mortgage transaction. 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. In servicing mortgages, the mortgage company must verify that all mortgaged properties have hazard insurance. A mortgage errors and omissions policy provides blanket coverage for any inadvertent omission.
Workers compensation exposures are light as mortgage companies keep little cash on the premises and are therefore 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 injuries.
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 company must continue operations after a loss.
Crime exposure is primarily from employee dishonesty, either from theft or from the improper transfer of funds held for customers. Mortgage companies need a Financial Institutions Bond to cover this and other crime 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 mortgage companies.
Inland marine exposures are from accounts receivable for billings to customers, computers used 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.
Commercial auto exposures may be limited to hired and non-owned for employees running errands. If the company provides vehicles 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.
MD Mortgage Broker Insurance
You must be a qualified MD mortgage broker. You must also be able to provide proof that you have all the necessary professional training and education required to practice this profession. There are numerous components involved in processing a loan - all of which could lead to a claim if a customer emerges unsatisfied. Running your mortgage brokerage firm also presents various business risks. The smart mortgage professional recognizes these risks, and insures themselves with a comprehensive mortgage broker insurance plan.
Maryland Economic Data And Business Insurance Regulations
Business owners that have their sights set on Maryland should to take a number of factors into consideration before the set up shop; namely, they need to determine if the state offers favorable for business owners in general, as well as their specific industry. After all, it doesn't matter how top-notch the products and services a business offers may be, if the location isn't favorable for the industry - and businesses, in general - the operation is going to have a hard time thriving.
Below, we examine key factors that indicate whether or not Maryland is favorable for business owners. We also look at some of the must-have types of commercial insurance coverage that are required in the state.
Economic Trends For Maryland Business Owners
A state's unemployment rate is key indicator of whether or not the climate is favorable for business operations. As of May, 2019, the unemployment rate in the Old Line State was 3.8 percent; 0.2 percent higher than the national average. In October of 2020, the rate hit a record low of 3.7 percent, so in less than a year, the unemployment rate has increased by .01 percent; a marginal increase. However, there have been gains in recent years; in 2010, the rate was 7.8 percent; that's a 4.0 percent increase in less than a decade.
The best place to start a business in Maryland is in Baltimore, the state's largest city. Suburbs of the city also offer promising conditions for business owners, such as Ellicott City, Columbia, Fulton, Lutherville, and Elkridge.
The state of Maryland offers a friendly culture for business of all shapes and sizes; but, the industries that are see the most success in the Old Line State include:
- BioHealth and Life Sciences
- Advanced manufacturing
- Information technology
- Aerospace and defense
- Financial services
- Energy (specifically green energy)
- Hospitality and tourism
Commercial Insurance Regulations In MD
The Maryland Insurance Administration regulates insurance in Maryland. Commercial insurance is designed to protect business owners from potential perils; it also protects anyone that interacts with a business, including consumers, vendors, and employees. Having the right type of coverage is not only crucial to avoid serious financial devastation in the even that a catastrophe does occur, but certain types of insurance are mandated, meaning business owners must carry specific forms of coverage.
In the state of Maryland, business owners are required to carry workers' compensation insurance, which offers coverage for on-the-job accidents and illnesses that employees sustain, is also required. Other forms of insurance coverage that business owners may need to invest in depend on the specific industry; for example, companies that distribute or sell alcohol will need liquor liability insurance, and businesses that utilize vehicles for business-related operations should carry commercial auto insurance to protect their drivers and other motorists on the road.
Additional Resources For Real Estate Insurance
Learn about small business real estate insurance coverages including liability and commercial property policies for realtors, mortgage companies and more.
- Corporate Office Insurance
- Home Inspection Insurance
- Mortgage Broker Insurance
- Property Manager Insurance
- Real Estate Agents Insurance
- Real Estate Appraiser Insurance
For real estate professional liability policies, the insurance company agrees to pay amounts the insured is legally obligated to pay as damages because of a wrongful act. However, this insurance must cover the wrongful act.
The insurance company not only has the right to defend any suit brought against the insured, it also has a duty to do so. That duty, which can be very expensive, does not apply to suits brought for wrongful acts that this insurance does not cover.
What type of coverage is available for real estate agents who provide insurance advice? Any claim related to the sale or purchase of insurance is not covered. In addition, there is no coverage for any recommendations or advice regarding insurance or any failure to procure or maintain appropriate insurance.
Who is considered an insured under the Real Estate Agents and Brokers Professional Liability Policy? The named insured is an insured. The named insured is the entity or individual listed on the declarations. There can be multiple named insureds.
Any entity listed in the application as a predecessor organization is an insured. The named insured must be the entity's majority successor of interest with respect to the predecessor organization's financial assets and liabilities.
Are Real Estate Brokers Professional Liability policies written on an "occurrence" or a "claims-made" basis? Insurance is written on a claims-made basis, requiring that a claim must be reported to the insurer during the policy period or during the extended reporting period.
Minimum recommended small business insurance coverage: Business Personal Property, Business Income with Extra Expense, Employee Dishonesty, Money and Securities, 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, Earthquake, Equipment Breakdown, Flood, Computer Fraud, Forgery, Cyber Liability, Employment-related Practices Liability, Business Auto Liability and Physical Damage abd Stop Gap Liability.
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