Every business needs protection, and mortgage bankers and brokers are no different. When it comes down to being defended in a lawsuit, every mortgage banker or broker needs to make sure they have the funds to protect their business and keep it running.
While the term "banker" is broad, it includes escrow agents, tax planners, financial planners, estate planners and more. Bankers liability insurance covers directors, officers, full-time, part-time and seasonal employees.
These are the most important forms of coverage needed, as well as mortgage broker insurance requirements:
What is Covered?
A bank could be sued for a breach of duty, misleading statement, incorrect statement or other various issues related to its deposit, brokerage, insurance, real estate, credit card or other services, according to Investopedia. These are the types of thing that one will need coverage for. A couple examples of situations where coverage is needed include:
- Misrepresentation of Loan Terms: A lawsuit filed alleges that an employee promised a loan that did not include a prepayment penalty. Once attempting to refinance, it was found that the loan did include a prepayment penalty. This misrepresentation of terms can cause a lawsuit, in which your company would need to be protected from.
- Class Action Lawsuit for Excess Fees: A lawsuit filed alleges that excessive fees were paid and yields spread premiums. This would essentially be a breach of contract and a violation of the Consumer Protection Act.
These types of situations face high defense fees and legal fees that could easily cripple a company if it weren’t for bankers professional liability insurance. This type of insurance also covers claims involving violations of lending regulations like the Fair Housing Act, Truth in Lending Act, the Equal Credit Opportunity Act and the Real Estate Settlement Procedures Act.
What is Not Covered?
There are things that do not fall under mortgage broker insurance requirements and won’t be covered by an insurance policy, including dishonest or fraudulent behavior. Deliberate violations of the law or other criminal acts like libel, slander, defamation or invasion of privacy are also not covered by this policy. Other requirements to deal with are who will pick your legal defense: it can either be up to you or the insurance company. This is why it’s important to know your policy inside and out, and be sure to purchase tailored coverage your business needs.
About Axis Insurance
At Axis Insurance Services, we aim to help our customers identify their exposures and protect themselves. Founded in 1999, we offer insurance programs to a wide variety of professionals and industries including attorneys, real estate, healthcare, architects, and more, and also have a wholesale division. We pride ourselves on offering flexible insurance coverage tailored specifically to each customer’s needs. To learn more about our solutions, contact us at (201) 847-9175 to speak with one of our professionals.