Finance Company Insurance

Or call for your free quote:

Get the best small business insurance quotes online & info on cost, coverage, minimum requirements, certificates & more.

Finance Company Insurance Policy Information

Finance Company Insurance

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 finance company insurance are needed? Read on to learn more.

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.

Below are some answers to commonly asked financing company insurance questions:


How Much Does Finance Company Insurance Cost?

The average price of a standard $1,000,000/$2,000,000 General Liability Insurance policy for small finance companies ranges from $37 to $59 per month based on location, size, revenue, claims history and more.


Why Do Finance Companies Need Insurance?

Insurance For Financing

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 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 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 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 finance company insurance that are usually needed:

  • Commercial Property - This type of 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 finance company insurance.

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


Finance Companies' Risks & Exposures

Financing Sign

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.

Commercial Insurance And Business Industry Classification

  • SIC CODE: 6141 Personal Credit Institutions, 6153 Short-Term Business Credit Institutions, Except Agricultural, 6159 Miscellaneous Business Credit Institutions, 6162 Mortgage Bankers And Correspondents, 6163 Loan Brokers
  • NAICS CODE: 522210 Credit Card Issuing, 522220 Sales Financing, 522291 Consumer Lending, 522292 Real Estate Credit, 522293 International Trade Financing 522294 Secondary Market Financing, 522298 All Other Nondepository Credit Intermediations, 522390 Other Activities Related to Credit Intermediaries
  • Suggested ISO General Liability Code(s): 61223
  • Suggested Workers Compensation Code(s): 8810, 8742

Description for 6141: Personal Credit Institutions

Division H: Finance, Insurance, And Real Estate | Major Group 61: Non-depository Credit Institutions | Industry Group 614: Personal Credit Institutions

6141 Personal Credit Institutions: Establishments primarily engaged in providing loans to individuals. Also included in this industry are establishments primarily engaged in financing retail sales made on the installment plan and financing automobile loans for individuals.

  • Automobile loans (may include automobile insurance)
  • Consumer finance companies
  • Financing of automobiles, furniture, appliances, personal airplanes,
  • Industrial loan "banks", not engaged in deposit banking
  • Industrial loan companies, not engaged in deposit banking
  • Installment sales finance, other than banks
  • Loan companies, small: licensed
  • Loan societies, remedial
  • Morris plans not engaged in deposit banking
  • Mutual benefit associations
  • Personal finance companies, small loan: licensed

Description for 6153: Short-Term Business Credit Institutions, Except Agricultural

Division H: Finance, Insurance, And Real Estate | Major Group 61: Non-depository Credit Institutions | Industry Group 615: Business Credit Institutions

6153 Short-Term Business Credit Institutions, Except Agricultural: Establishments primarily engaged in extending credit to business enterprises for relatively short periods. Private establishments primarily engaged in extending agricultural credit are classified in Industry 6159.

  • Business credit institutions, short-term Credit card service,
  • Direct working capital financing
  • Factors of commercial paper
  • Financing of dealers by motor vehicle manufacturers'organizations
  • Installment notes, buying of
  • Installment paper dealer
  • Mercantile financing
  • Purchasers of accounts receivable and commercial paper
  • Trust deeds, purchase and sale of
  • Working capital financing

Description for 6159: Miscellaneous Business Credit Institutions

Division H: Finance, Insurance, And Real Estate | Major Group 61: Non-depository Credit Institutions | Industry Group 615: Business Credit Institutions

6159 Miscellaneous Business Credit Institutions: Establishments primarily engaged in furnishing intermediate or long-term general and industrial credit, including the finance leasing of automobiles, trucks, and machinery and equipment. Included in this industry are private establishments primarily engaged in extending agricultural credit. Federal and federally-sponsored credit agencies primarily engaged in extending agricultural credit are classified in Industry 6111. Establishments primarily engaged in other types of leasing of passenger cars and trucks are classified in Industry Group 751.

  • Agricultural loan companies
  • Automobile finance leasing
  • Credit institutions, agricultural
  • Farm mortgage companies
  • Finance leasing of equipment and vehicles
  • General and industrial loan institutions
  • Intermediate investment "banks"
  • Investment companies, small business
  • Livestock loan companies
  • Loan institutions, general and industrial
  • Machinery and equipment finance leasing
  • Pari-mutuel totalizator equipment finance leasing and maintenance
  • Production credit association, agricultural
  • Truck finance leasing

Description for 6162: Mortgage Bankers And Correspondents

Division H: Finance, Insurance, And Real Estate | Major Group 61: Non-depository Credit Institutions | Industry Group 616: Mortgage Bankers And Brokers

6162 Mortgage Bankers And Correspondents: Establishments primarily engaged in originating mortgage loans, selling mortgage loans to permanent investors, and servicing these loans. They may also provide real estate construction loans.

  • Bond and mortgage companies
  • Loan correspondents
  • Mortgage bankers
  • Mortgage brokers, using own money
  • Mortgage companies, urban

Description for 6163: Loan Brokers

Division H: Finance, Insurance, And Real Estate | Major Group 61: Non-depository Credit Institutions | Industry Group 616: Mortgage Bankers And Brokers

6163 Loan Brokers: Establishments primarily engaged in arranging loans for others. These establishments operate mostly on a commission or fee basis and do not ordinarily have any continuing relationship with either borrower or lender.

  • Agents, farm or business loan
  • Brokers, farm or business loan
  • Loan agents
  • Loan brokers
  • Mortgage brokers arranging for loans but using money of others

Finance Company Insurance - The Bottom Line

To learn more about the specific types of 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.

Types Of Small Business Insurance - Requirements & Regulations

Perhaps you have the next great idea for a product or service that you know will appeal to your local area. If you've got a business, you've got risks. Unexpected events and lawsuits can wipe out a business quickly, wasting all the time and money you've invested.

Operating a business is challenging enough without having to worry about suffering a significant financial loss due to unforeseen and unplanned circumstances. Small business insurance can protect your company from some of the more common losses experienced by business owners, such as property damage, business interruption, theft, liability, and employee injury.

Purchasing the appropriate commercial insurance coverage can make the difference between going out of business after a loss or recovering with minimal business interruption and financial impairment to your company's operations.

Small Business Information

Insurance is so important to proper business function that both federal governments and state governments require companies to carry certain types. Thus, being properly insured also helps you protect your company by protecting it from government fines and penalties.

Small Business Insurance Information

In the business world, there are many risks faced by company's every day. The best way that business owners can protect themselves from these perils is by carrying the right insurance coverage.

The The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.

Commercial insurance is particularly important for small business owners, as they stand to lose a lot more. Should a situation arise - a lawsuit, property damage, theft, etc. - small business owners could end up facing serious financial turmoil.

According to the SBA, having the right insurance plan in place can help you avoid major pitfalls. Your business insurance should offer coverage for all of your assets. It should also include liability and casual coverage.

Types Of Small Business Insurance

Choosing the right type of coverage is absolutely vital. You've got plenty of options. Some you'll need. Some you won't. You should know what's available. Once you look over your options you'll need to conduct a thorough risk assessment. As you evaluate each type of insurance, ask yourself:

  • What type of business am I running?
  • What are common risks associated with this industry?
  • Does this type of insurance cover a situation that could feasibly arise during the normal course of doing business?
  • Does my state require me to carry this type of insurance?
  • Does my lender or do any of my investors require me to carry this type of policy?

A licensed insurance agent or broker in your state can help you determine what kinds of coverages are prudent for your business types. If you find one licensed to sell multiple policies from multiple companies (independent agents) that person can often help you get the best insurance rates, too. Following is some information on some of the most common small business insurance policies:

Business Insurance Policy Type What Is Covered?
General Liability InsuranceWhat is covered under commercial general liability insurance? It steps in to pay claims when you lose a lawsuit with an injured customer, employee, or vendor. The injury could be physical, or it could be a financial loss based on advertising practices.
Workers Compensation InsuranceWhat is covered under workers compensation insurance? This type of insurance protects a business and its owner(s) from claims by employees who suffer a work-related injury, illness or disease. Workers comp typically provides the injured employee with benefits to cover medical expenses, a portion of his/her lost wages, rehabilitation costs if applicable, and permanent partial or permanent total disability.
Product Liability InsuranceWhat is covered under product liability insurance? I pays an injured party's settlement or lawsuit claim arising from a defective product. These are usually caused by design defects, manufacturing defects, or a failure to provide adequate warning or instructions as to how to safely use the product.
Commercial Property InsuranceWhat is covered under business property insurance? General liability policies don't cover damages to your business property. That's what commercial property insurance is for. It protects all of the physical parts of your business: your building, your inventory, and your equipment, giving you the funds you need to replace them in the event of a disaster. If you work from home, you might consider a Home Based Business Insurance policy instead.
Business Owners Policy (BOP)What is covered under a business owners policy (BOP)? This is a policy designed for small, low-risk businesses. It simplifies the basic insurance purchase process by combining general liability policies with business income and commercial property insurance.
Commercial Auto InsuranceWhat is covered under business auto insurance? This type of insurance covers automobiles being used for business purposes. This could include a fleet of business-only vehicles or a single company car. In some cases it might cover your car or your employee's car while they're being used for business. These policies have much higher limits, ensuring you can cover your costs if one of these vehicles gets into an accident.
Commercial Umbrella PoliciesWhat is covered under commercial umbrella insurance? This type of policy is a sort of "gap" insurance. It covers your liability in the event that a court verdict or settlement exceeds your general liability policy limits.
Liquor Liability InsuranceWhat is covered under liquor liability insurance? It covers bodily injury or property damage caused by an intoxicated person who was served liquor by the policy holder.
Professional Liability (Errors & Omissions)What is covered under professional liability insurance? This type of business insurance is also known as malpractice oe E&O. It covers the damages that can arise from major mistakes, especially in high-stakes professions where mistakes can be devastating.
Surety BondWhat is covered under surety bonds? Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).


Who Needs General Liability Insurance? - Virtually every business. A single lawsuit or settlement could bankrupt your business five times over. You might also need this policy to win business. Many companies and government agencies won't do business with your company until you can produce proof that you've obtained one of these policies.

Business Insurance Required by Law
Small Business Commercial Insurance

If you have any employees most states will require you to carry worker's compensation and unemployment insurance. Some states require you to insure yourself even if you are the only employee working in the business.

Your insurance agent can help you check applicable state laws so you can bring your business into compliance.

Other Types Of Small Business Insurance

There are dozens of other, more specialized forms of small business insurance capable of covering specific problems and risks. These forms of insurance include:

  • Business Interruption Insurance
  • Commercial Flood Insurance
  • Contractor's Insurance
  • Cyber Liability
  • Data Breach
  • Directors and Officers
  • Employment Practices Liability
  • Environmental or Pollution Liability
  • Management Liability
  • Sexual Misconduct Liability

Whether you need any or all of these policies will depend on the results of your risk assessment. For example, you probably don't need an environmental or pollution policy if you're running an IT company out of a leased office, but you would need data breach and cyber liability policies to fully protect your business.

Also learn about small business insurance requirements for general liability, business property, commercial auto & workers compensation including small business commercial insurance costs. Call us (855) 767-7828.

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.


Free Business Insurance Quote Click Here