Credit Bureau Insurance Policy Information
Credit Bureau Insurance. Credit bureaus, also known as credit reporting agencies, are commercial ventures that gather, investigate, and store information about the credit scores of companies and individuals.
This information is then made available to creditors for a fee, primarily with the purpose of helping them make decisions about entering into loan agreements with the target company or individual.
Credit bureaus search and obtain access to a variety of public, banking, and financial records to provide their clients information about a prospective customer's borrowing habits and ability to pay their bills on time.
Clients include organizations such as an automobile finance company, bank, mortgage company, insurer, or investment broker. Regulation is conducted at the federal level.
The bureau may be held liable for reporting incorrect information to the client about a potential customer, either by including information that is inaccurate or excluding correct information.
Credit bureaus have grown to play an increasingly important role in the economy. While most credit reports are handled by industry giants, smaller and niche credit reporting agencies are also successful.
These bureaus are subject to tight regulations to ensure they perform their activities in such a manner that the information they offer is accurate and up to date, and their power cannot be abused.
Although credit bureaus perform an important function, they, too, are businesses. Like all other commercial ventures, they face risks that could lead to detrimental financial outcomes.
Most people have heard of the three major consumer credit bureaus:
But there are other consumer-reporting companies that offer supplementary or alternative reporting. Some of the other companies include:
- Clarity Services
- CoreLogic Credco
- CoreLogic Teletrack
- LexisNexis Risk Solutions
- SageStream (subsidiary of ID Analytics LLC)
What kinds of credit bureau insurance might be needed to shield them from the consequences of major perils? To discover more, read on.
Credit bureau insurance protects your credit scoring business and reporting business from lawsuits with rates as low as $37/mo. Get a fast quote and your certificate of insurance now.
Below are some answers to commonly asked credit bureau insurance questions:
- What Is Credit Bureau Insurance?
- How Much Does Credit Bureau Insurance Cost?
- Why Do Credit Bureaus Need Insurance?
- What Type Of Insurance Do Credit Bureaus Need?
- What Does Credit Bureau Insurance Cover & Pay For?
What Is Credit Bureau Insurance?
Credit Bureau business insurance is a type of insurance coverage that is designed to protect credit reporting agencies from financial losses resulting from lawsuits and other legal claims. This insurance may cover a wide range of claims, including those related to errors in credit reports, data breaches, and violations of consumer protection laws.
The coverage may also include legal defense costs and settlements, as well as any other expenses associated with defending against a lawsuit or legal claim.
The goal of this insurance is to help credit reporting agencies manage the financial risks associated with operating in a highly regulated industry, and to ensure that they are able to continue to provide credit reporting services to their clients even in the face of legal challenges.
How Much Does Credit Bureau Insurance Cost?
The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for credit reporting businesses ranges from $37 to $59 per month based on location, size, revenue, claims history and more.
Why Do Credit Bureaus Need Insurance?
Credit bureaus need to carry excellent insurance because just like other companies, they face a number of hazards. Despite all the proactive measures that can be taken to reduce the risk of various types of perils, unforeseen circumstances can always occur.
Credit bureaus may be plagued by some of the same perils that threaten all companies, regardless of their branch of commerce, as well as those unique to this field.
Commercial premises and the contents therein can be impacted by numerous incidents, leading to severe property loss. An act of nature, such as a wildfire, earthquake, or severe flood, is completely beyond anyone's control.
Theft and vandalism are risks that can be mitigated but never fully prevented, and in addition to physical assets, electronic assets - in the case of credit bureaus, extremely sensitive data - can also be attacked.
Employee and third party fraud are two more examples of serious perils credit bureaus may face, and that could both lead to lengthy lawsuits accompanied by truly massive costs.
In addition, liability risks can also be found in the potential that an employee or third party could become physically injured on the premises of a credit bureau, or that the company inadvertently damages or destroys property belonging to someone else - whether because a fire that started in that company's property spreads to a building in the vicinity, or when rented equipment is broken, for instance.
For large companies, there is no question at all that they will, from time to time, be hit by significant perils. Comprehensive credit bureau insurance serves the purpose of managing the costs that arise when something goes wrong.
What Type Of Insurance Do Credit Bureaus Need?
Anyone who has ever investigated commercial insurance knows that almost countless types of coverage are available to meet the needs of any type of company. The path towards obtaining top-quality insurance is never straightforward, as an individual venture's insurance needs depend on factors like their size, number of employees, locations, and types of assets.
Because of this, a commercial insurance broker should always play a key role in helping any company meet their insurance requirements. However, the core kinds of credit bureau insurance coverage needed include:
- Commercial Property - This form of coverage protects companies from financial loss if their commercial buildings, and their physical contents, are damaged or lost over the course of perils like fire, theft, vandalism, and acts of nature. With an additional business interruption policy, revenue lost as a result of these events can also be covered.
- Commercial General Liability - Essential if a company faces bodily injury or property damage lawsuits of a general nature, this type of insurance helps manage the significant legal and settlement expenses that follow.
- Errors And Omissions - These credit bureau insurance policies are designed to protect against liability claims pertaining to circumstances unique to a particular profession. If a credit bureau is accused of negligence, errors, or copyright infringements, this type of insurance helps deal with the costs.
- Workers Compensation - Even administrative employees can be injured at work in a variety of ways. Workers' comp takes care of the medical costs and the wages lost to work absences.
These are merely examples of the kinds of credit bureau insurance coverage needed to protect their business interests. To find out more about their specific needs, all companies should turn to a competent commercial insurance broker who is deeply familiar with their branch of commerce.
Credit Bureau's Risks & Exposures
Premises liability exposures are often minimal since most of the client contact is done electronically or by mail. Personal injury exposures include allegations of discrimination, invasion of privacy, libel, and slander.
The bureau must verify that its clients have proper grounds to initiate credit investigation proceedings. Accuracy is critical as inaccurate statistics and data can pose serious problems for the client and its customers. Policies concerning employee conduct should be established with periodic training provided.
Most credit bureaus have workers who do research at libraries or banks and have access to electronic financial data. However, if the operation sends agents to visit the premises or canvass friends or neighbors of a client's customer, great care is necessary in what is asked and how the questions are posed.
Workers compensation exposure is generally limited to that of an office. Since work is done on computers, potential injuries include eyestrain, neck strain, carpal tunnel syndrome, and similar cumulative trauma injuries that can be addressed through ergonomically designed workstations.
Some bureaus have significant off-site work. Workers can be injured by slips and falls at clients' premises or 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. Computers and other electronic equipment may be targets for theft.
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.
Inland marine exposures are accounts receivable if the bureau offers credit, computers, and valuable papers and records for customers' and borrowers' information. The research on file may be difficult to recreate. 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 allow for re-creation in the event of a loss.
Crime exposure comes from employee dishonesty, which can be quite serious because credit investigation bureaus possess unique access to personal financial information. Potential for theft, directly or through identity theft, is great.
Background checks should be conducted on all employees handling money. There must be a separation of duties between persons handling orders, deposits and disbursements and reconciling bank statements.
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.
What Does Credit Bureau Insurance Cover & Pay For?
Credit bureaus can be sued for various reasons, including violations of consumer rights, inaccuracies in credit reporting, and data breaches. Insurance policies can help protect credit bureaus from the financial consequences of these lawsuits. Here are a few examples of the reasons for lawsuits and how insurance can help:
Violation of the Fair Credit Reporting Act (FCRA): The FCRA is a federal law that governs the collection, dissemination, and use of consumer credit information. If a credit bureau violates this act, consumers can sue them for damages. Professional liability insurance, also known as errors and omissions (E&O) insurance, can help cover the costs of defending against such lawsuits and any resulting settlements or judgments.
Inaccurate credit reporting: If a credit bureau reports inaccurate information about a consumer, it may lead to negative consequences for the consumer, such as being denied credit or employment opportunities. The consumer may sue the credit bureau for damages caused by the inaccuracies. E&O insurance can help cover the costs of defense, settlements, and judgments in such cases.
Data breaches and identity theft: Credit bureaus store vast amounts of sensitive personal and financial information, making them a target for cybercriminals. If a data breach occurs and consumer information is compromised, affected individuals may sue the credit bureau for failing to protect their data. Cyber liability insurance can help cover the costs of defense, settlements, and judgments, as well as expenses related to breach notification, credit monitoring, and public relations efforts.
Discrimination: If a credit bureau is accused of discriminatory practices, such as reporting credit information differently based on a consumer's race, gender, or other protected characteristics, they can be sued under anti-discrimination laws. E&O insurance can help cover the costs of defense, settlements, and judgments in these cases.
Breach of contract: Credit bureaus may have contractual obligations with clients, such as lenders, that require them to provide accurate and timely credit information. If a client believes the credit bureau has breached its contract, they may sue for damages. Commercial general liability (CGL) insurance can help cover the costs of defense, settlements, and judgments in these cases.
In each of these examples, insurance can provide financial protection for the credit bureau by covering legal defense costs, settlements, and judgments, helping to mitigate the financial impact of a lawsuit.
Commercial Insurance And Business Industry Classification
- SIC CODE: 7323 Credit Reporting Services
- NAICS CODE: 561450 Credit Bureaus
- Suggested Workers Compensation Code(s): 8810 Clerical Office Employees NOC
7323: Credit Reporting Services
Division I: Services | Major Group 73: Business Services | Industry Group 732: Consumer Credit Reporting Agencies, Mercantile
7323 Credit Reporting Services: Establishments primarily engaged in providing mercantile and consumer credit reporting services.
- Consumer credit reporting bureaus
- Credit bureaus and agencies
- Credit clearinghouses
- Credit investigation services
- Mercantile credit reporting bureaus
Credit Bureau Insurance - The Bottom Line
To learn more about the specific types of credit bureau insurance policies you'll need, what limits you should consider and the associated premiums, consult with a reputable commercial insurance agent.
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
- Tax Preparer
- Temporary Staffing
- Title Abstractors
- Valet Parking
- Specialty Consultants
- Specialty Service Business
The professional services industry, which includes occupations such as lawyers, doctors, accountants, and architects, often deals with sensitive and complex issues that carry a high risk of liability. These professionals are expected to provide their clients with expert advice and guidance, and any mistakes or oversights can result in significant financial consequences for both the client and the professional. This is where insurance comes into play.
Business insurance provides protection against the financial repercussions of potential mistakes or accidents that may occur while providing professional services. For example, a lawyer may make an error in their legal representation that leads to a financial loss for their client. Without insurance, the lawyer would be personally responsible for covering the cost of this loss. Insurance helps to protect professionals from these types of financial burdens and allows them to focus on providing high-quality services to their clients.
In addition to protecting against financial losses, commercial insurance can also provide legal defense for professionals facing legal action as a result of their work. This can be especially important for professionals in high-stress or high-risk fields, such as doctors or architects, who may be at a higher risk of being sued for professional negligence.
Overall, the professional services industry needs insurance to protect against financial losses and legal action, ensuring that professionals can continue to provide high-quality services to their clients without the added stress and burden of potential financial consequences.
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.