If It Ain't Brokered, Don't Risk It
Top 5 Risks for Agents and Brokers

All businesses face certain general risks: the risk of going out of business, the risk of being hit by lightning. But then there are the risks that you're exposed to specifically because of the work you do. That's right: the very reason you're able to earn revenue in the first place brings with it an entire world of risk exposures that threaten the security of that revenue.

The good news is that being aware of your risks is the first step toward managing them and minimizing the odds that they'll lead to financial losses for your business. Here's a look at the top five risks that small agencies and brokerages face.

Risk #1.

#1. Miscommunication.

When you're explaining complex financial or risk-management concepts to clients, it's easy to assume they understand what you're saying. And your client may not realize they've misunderstood until it's too late (that is, until something you thought they agreed to leads to a financial loss and they announce that they're furious and are going to sue). For insurance agents, some of the top triggers of professional liability lawsuits are failure to adequately explain policy provisions, failure to recommend an important type of coverage, and failure to adequately identify client risk exposures.

Risk #2.

#2. Missed deadlines.

In the world of stock broking, a few hours can make the difference between a getting a great deal and missing it. And for insurance professionals, one major source of professional liability lawsuits is failure to notify a carrier about a claim in a timely manner. Avoid costly lawsuits by being diligent about due dates and deadlines in all areas of your business.

Risk #3.

#3. Bad luck.

It's not your fault if a client's home floods right after they refused to endorse their homeowner's policy with flood coverage. It's also not your fault if the stock market tanks. But clients may sue you for these things anyway, in hopes of recovering some of their losses. Remember: even a frivolous lawsuit can cost between $2,000 and $5,000 dollars in legal bills.

Risk #4.

#4. Slips and falls.

Every year in the U.S., there are 8.9 million trips to the emergency room because of slip and fall injuries, according to the National Safety Council. That number is so high because this type of injury can happen anywhere — including in your office.

Risk #5.

#5. Data breaches.

All businesses that process sensitive data are attractive targets for hackers, and insurance agents and brokers tend to have sensitive financial information in droves. But if you're like 63 percent of businesses, you don't have a "fully mature" system for controlling that data. Or maybe you're like the 19 percent that has no system at all for protecting sensitive client info. Either way, your business makes you a target for a data breach, which could end up costing you a lot in both dollars and reputational damage.

How Business Insurance Can Help Reduce Your Risks

While small business insurance can't actually prevent bad things from happening to your business, it can prevent worst-case scenarios from forcing you to shut your doors. Many client lawsuits over your performance as an insurance advisor or stock broker, for example, can be covered by a Professional Liability Insurance policy. That means that your insurance would pay for any court costs associated with defending your business against claims brought by clients.

There are also policies available to cover the costs associated with third-party slips and falls, data breaches, and damage to your business property. Talk to your insurance agent about choosing the policies that best reduce your risks.

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