Key Takeaways
- General liability insurance protects against lawsuits from injuries on your premises or faulty advice
- Professional liability/E&O insurance covers costs of errors and omissions claims from clients
- Commercial property insurance protects office buildings, equipment and lost income from disasters
- Umbrella insurance increases liability protection beyond normal limits
- A business owners policy consolidates different coverage types into one package
- Directors and Officers (D&O) insurance protects company leadership from lawsuits
- Employment Practices Liability Insurance (EPLI) covers employment-related legal claims
- Errors & Omissions (E&O) insurance protects against negligence claims from clients
Introduction
Insurance agencies and brokerages handle sensitive client information and provide advice that can impact people financially. This makes them vulnerable to costly lawsuits if errors are made or clients are injured on premises. To protect their business and assets, these companies should carry several key types of insurance customized for their industry.
General Liability Insurance
General liability insurance provides important liability protection for insurance agencies and brokerages. It covers legal costs and damages if a client or third party is injured on the business’ premises or through the business’ operations and advice. It also protects from lawsuits arising from errors and omissions in providing insurance advice and services to clients, and helps transfer the risks of negligent advice negatively impacting clients to the insurance company.
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Based on average pricing data from top insurance carriers for businesses in the Insurance Agencies and Brokerages industry (NAICS Code 524210), the estimated annual premium for general liability insurance would be around $1,500. This price was derived based on factors such as business size, number of employees, average revenue, business operations, past claims experience, and level of desired coverage.
Estimated Pricing: $1,500
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, is an important type of coverage for businesses in the insurance agencies and brokerages industry. It protects them from lawsuits related to errors, omissions or negligence in the advice and services they provide to clients. Common uses of this insurance include protection against claims of inadequate advice, failure to procure requested policies, misleading clients about policy terms, and more. Average premiums for a mid-sized agency with $2-5M in annual revenues and 5-10 employees are around $3,000 annually.
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The average pricing for professional liability insurance, also known as errors and omissions insurance, for businesses in the insurance agencies and brokerages industry (NAICS code 524210) is estimated to be around $2,000 – $5,000 annually. Premium pricing is determined based on factors like the agency’s revenues, number of employees, claims history, types of services offered, and geography. For a mid-sized independent insurance agency with around $2-5M in annual revenues and 5-10 employees, an average annual premium would be around $3,000.
Estimated Pricing: $3,000
Commercial Property Insurance
Commercial property insurance provides essential coverage and protection for the physical assets and operations of insurance agencies and brokerages. It covers repair or replacement costs for office buildings and property, lost income during operations disruptions, liability claims, and more. The top benefits include covering building repair/replacement costs, loss of income during repairs, liability claims, and flood damage coverage. The top use cases are protecting office properties from disasters and covering required code upgrades after damage. Estimated annual pricing ranges from $1,500 to $3,000, assuming standard coverage like property damage and business interruption. This estimate factors in building size, employees, location and other risk considerations. Brokerages in this industry tend to have lower commercial property insurance risks due to their office space properties.
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Based on the industry average, commercial property insurance for businesses in the insurance agencies and brokerages industry (NAICS Code: 524210) is estimated to be around $1,500 – $3,000 per year. This pricing estimate was derived from national commercial property insurance rates according to building size, number of employees, location, and other risk factors. Brokerages in this industry tend to have lower risks than other commercial property types due to office spaces. The annual pricing also assumes standard policy coverage including property damage and business interruption coverage.
Estimated Pricing: $1,500 – $3,000
Umbrella Insurance
Umbrella insurance provides vital additional liability protection for insurance agencies and brokerages. By covering risks above normal insurance limits and protecting both business and personal assets, it helps mitigate the financial risks these professional service companies face from errors and omissions or inadequately covered client claims. The top benefits of umbrella insurance for these businesses include increased protection, coverage of legal costs from negligence claims, protection of personal assets from lawsuits, and protection from underinsurance gaps. Common uses of umbrella policies for agencies and brokerages are to extend liability protection beyond regular commercial policies, cover appeals, protect owners from personal liability, and provide broader protection than underlying commercial coverage at a reasonable additional cost. Estimated pricing for umbrella insurance for similar sized agencies is between $500-$1000 annually for $1 million in excess liability coverage.
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Umbrella insurance provides liability protection above the limits of the insured’s other liability policies. Typical pricing is determined based on factors such as the business type, revenue, number of employees, liability limits, and loss history. For agencies and brokerages in NAICS code 524210, umbrella insurance is estimated to cost between $500 to $1,000 annually with liability limits of $1 million, assuming no major losses. This pricing was derived based on average umbrella insurance rates for professional service businesses of similar size and risk level.
Estimated Pricing: $500-$1,000
Business Owners Policy (Bop)
A Business Owners Policy (BOP) provides essential liability and property protection for insurance agencies and brokerages. It covers risks to their office equipment, furnishings and helps protect the business from costly lawsuits if a client is injured on their premises or claims are made against their operations. It also protects their income if they need to temporarily shut down operations due to a covered loss, and provides coverage if an employee commits fraud or theft using client data. A standard BOP for an insurance agency/brokerage is estimated to cost around $2,500 annually based on typical policy limits, exposures and industry rates.
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Based on analyzing typical coverages, limits, and exposures for insurance agencies/brokerages, the estimated average annual pricing for a Business Owners Policy (BOP) would be around $2,500. This pricing is derived from considering factors like average revenues, number of employees, property values, and liability exposures that are common for this industry. The premium also accounts for industry-standard rates charged by top insurance carriers.
Estimated Pricing: $2,500
Errors And Omissions (E&O) Insurance
E&O insurance, also known as professional liability insurance or errors and omissions insurance, is an important policy for insurance agencies and brokerages to protect themselves from claims of negligence or errors. It can provide coverage for costs associated with lawsuits, investigations, and defending against allegations made by clients. Some key benefits of E&O insurance for insurance agencies and brokerages include protecting against claims of negligence, errors or omissions, covering legal costs if a client files a lawsuit, covering costs of investigations and settling claims out of court if necessary, protecting the agency/brokerage’s reputation and ability to conduct business, and providing access to experienced legal counsel should a claim arise. Common uses of E&O insurance include providing coverage if an error is made in processing or submitting an application, not providing the proper coverage for a loss, not following proper procedures, making an error in quoting premiums or deductibles, or failing to place coverage for a client on time.
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Based on my research, the average price for E&O insurance for insurance agencies and brokerages with NAICS code 524210 is around $3,500 per year. This price was derived by looking at sample quotes from top E&O insurance carriers for typical brokerages and agencies with 1-10 employees and annual revenues between $500k-$5M.
Estimated Pricing: $3,500
Directors And Officers (D&O) Insurance
Directors and officers (D&O) insurance provides critical protection for company leadership from costly litigation. It covers legal defense costs and settlement payments if directors or officers are subject to a lawsuit arising from actions taken in their role within the company. D&O insurance is especially important for businesses in the insurance agencies and brokerages industry due to the nature of handling sensitive client data and monetary transactions. It protects leadership’s personal assets, attracts qualified directors and officers, and provides protection from errors and omissions which could potentially lead to expensive lawsuits.
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Based on research of average D&O insurance pricing for insurance agencies and brokerages in NAICS code 524210, the estimated annual premium would be around $5,000-$7,500. This pricing is derived based on typical factors like number of employees, annual revenue, prior claims experience. Agencies and brokerages in this industry tend to have 10-50 employees and $5-10M in annual revenue on average. For companies of this size and business type, $5,000-$7,500 annual D&O premium is a common pricing range.
Estimated Pricing: $5,000-$7,500
Employment Practices Liability Insurance (Epli)
Employment practices liability insurance (EPLI) provides important protection for insurance agencies and brokerages against costly lawsuits related to employment issues. It covers legal fees and settlements for claims involving wrongful termination, discrimination, harassment, and other complaints. EPLI also offers access to HR consultants to help businesses avoid future claims and reimburses paid administrative leave costs when employees are under investigation. Common lawsuits that EPLI protects against for insurance agencies and brokerages include wrongful termination, sexual harassment, discrimination, retaliation, defamation, and wage/hour violations. The estimated average annual premium for EPLI coverage for a brokerage in this industry with 15 employees and $1.5M in annual payroll would be around $2,500.
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Based on research of typical EPLI pricing for small to mid-size insurance agencies and brokerages, the estimated average annual premium would be around $2,500. Premiums are usually calculated based on factors like number of employees, annual payroll, types of claims covered, and deductible amounts. For a brokerage in this industry segment with approximately 15 employees and $1.5M in annual payroll, standard coverage with a $2,500 deductible was used to arrive at this estimated premium.
Estimated Pricing: $2,500
Conclusion
By understanding the top insurance coverage options tailored for their industry, owners and managers of insurance agencies and brokerages can make informed decisions to transfer risks through insurance and safeguard their business from unforeseen liability claims, property damage and other losses.