Service Businesses Insurance FAQ

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Get answers to small business insurance frequently questions including costs, coverages, minimum requirements, certificates & more.

Types Of Small Business Insurance

  • Includes medical payments, legal representation, and defense against libel and slander accusations.
  • Provides financial protection if an employee has a job-related accident or illness.
  • Bundles general liability insurance and commercial property into one affordable policy.
  • Pays to repair or replace your business property if it's stolen, damaged, or destroyed in a fire or natural disaster.
  • Covers mistakes or alleged mistakes on your part (errors) & failures or alleged failures to perform a service (omissions).
  • Is liability and physical damage protection for vehicles, such as cars, trucks and vans, that are used for business.
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Frequently Asked Questions About Small Business Insurance


How much does general liability insurance cost?

In 2019, commercial general liability costs can vary widely based on industry. Businesses in higher risk industries pay more. Premiums are also determined by zip code and often payroll and/or gross sales. You can request a free quote to get an exact premium for your business. Read more...

What types of business insurance do I need?

Almost every business needs general liability and commercial property insurance at the very least. If you have any non-owner employees, you'll most likely need workers compensation insurance too as most state require it. It all depends on the risks your business faces. Read more...

How does general liability insurance work?

Having general liability is the basis of any business insurance program. If you can afford only one commercial insurance policy for your small business - then you should get a commercial general liability policy, because it offers protection against a wide range of common but unexpected risks. Read more...

What is a Certificate of Insurance?

A Certificate of Insurance (COI) is proof of coverage. It verifies that you have insurance coverage for your small business, & contains information on types and limits of coverage, insurance company, policy number, named insured, and the effective date of the policy. Read more...
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Service Businesses Insurance FAQ Information

Service Businesses Insurance FAQ

Service Businesses Insurance FAQ. Service businesses primary concern is on-premises and off-premises liability exposures.

Many also have significant exposures relating to property or information entrusted to them for which they are responsible. In addition, there is the possibility of physical loss or damage to their own property including mobile tools and equipment.

Automobile and employee exposures are also important because of off-premises aspects of the business.

We wanted to provide a deeper dive into small business insurance to help our readers get a better understand of the commercial insurance policies they want and need with the Service Businesses Insurance FAQ.

Read the Service Businesses Insurance FAQ to learn what type of commercial insurance coverages are right for your company - including liability, property, workers compensation and other specialty policies.

What Is A Service Business?

According to Business Dictionary - a service business is, "A commercial enterprise that provides work performed in an expert manner by an individual or team for the benefit of its customers. The typical service business provides intangible products...."

Service Businesses include - but are not limited to - the following types of businesses:

  • Abstractors
  • Accountants
  • Actuaries
  • Adjusters
  • Advertising Agencies
  • Alarm or Security System Monitoring
  • Alternative Dispute Resolutions
  • Animal Rescue Organizations
  • Appliance Services
  • Appraisers
  • Architects
  • Artists
  • Auctioneers
  • Auditors
  • Automobile Repossession Companies
  • Bail Agents
  • Barber Shops
  • Beauty Shops
  • Blacksmiths
  • Carpet Cleaners
  • Chemical Engineers
  • Civil Engineers
  • Collection Agencies
  • Commodity Brokers
  • Computer Maintenance and Repair
  • Consultants
  • Couriers
  • Courier Services
  • Credit Investigation Agencies
  • Curtain Cleaners
  • Data Processing Operations
  • Day Care - Adults
  • Day Care - Children
  • Detective Agencies
  • Diaper Services
  • Direct Mailing Houses
  • Dry Cleaners
  • Electronics Service Shops
  • Employment Agencies
  • Engineers
  • Environmental Consultants
  • Event
  • Party and Wedding Planners
  • Financial Planners
  • Fitness Centers or Health Clubs
  • Fuel Oil Dealers
  • Funeral Directors
  • Furniture Repair
  • Glaziers
  • Graphic Designers
  • Hat Cleaners
  • Health Maintenance Organizations
  • Home Inspectors
  • Inspection Bureaus
  • Insurance Agents and Brokers
  • Internet Service Providers
  • Kennels
  • Laboratories-Non-Medical
  • Laundries
  • Law Offices
  • Lecture Bureaus
  • Letter Writing Service Agencies
  • Limousines
  • Music Services
  • Musicians
  • Notaries
  • Nurses' Registers
  • Office Machine Services
  • Offices
  • Photographers
  • Piano Tuners
  • Property Managers
  • Public Stenographers
  • Radio and TV Repair
  • Real Estate Agencies
  • Recycling Yards
  • Reducing Salons
  • Rental-Contractors' Equipment
  • Rental-Short Term-Not Contractors' Equipment
  • Repair Services
  • Safety Consultants
  • Security Operations
  • Software Developers-Customized
  • Software Developers-Prepackaged
  • Stockbrokers
  • Surveyors
  • Tattoo Parlors
  • Tax Consultants
  • Taxi Services
  • Taxidermists
  • Telephone Answering Services
  • Telephone Companies
  • Theatrical Agencies
  • Tool Grinding and Repair
  • Travel Agencies
  • Upholsterers
  • Valet Parking Services
  • Veterinarians
  • Waste Disposal Landfill
  • Watchperson Services
  • Web Site Designers
  • Weight Loss Centers

You can reference the Insurance Definitions, Dictionary And Glossary to better understand the commercial insurance policy terms and language used in our Small Business Insurance FAQs.

Types Of Service Businesses Insurance Policies

Following are some suggested commercial policies and coverages applicable for service businesses:

PACKAGE POLICIES

Some service businesses are eligible for coverage under either an artisan contractor businessowners policy or a standard businessowners policy. Others are only eligible for coverage under a commercial package policy (CPP). Each policy has coverage and flexibility advantages and disadvantages that must be weighed and evaluated before making a final decision on the best policy to use for the specific risk in question.

Types Of Service Businesses Package Policies:

  • Artisan Contractor Businessowners Policy (BOP)
  • Businessowners Policy (BOP)
  • Commercial Package Policy (CPP)
PROPERTY COVERAGES

Most service businesses own only small amounts of business personal property. Much of the equipment at the location could be treated as building, while tools and equipment used both at the premises and away from it are better covered under an inland marine coverage form.

Time element exposures may be more in the form of extra expenses needed to continue operating rather than business income loss due to the operations having to stop.

Types Of Property Coverages:

  • Building
  • Business Personal Property
  • Personal Property of Others
  • Improvements and Betterments
INLAND MARINE COVERAGES

Inland marine coverages are an ideal product for most risks in the service industry because the coverage they provide on the insured property accompanies that property wherever it goes.

Types Of Inland Marine Coverages:

  • Accounts Receivable Coverage
  • Bailee Customers Coverage
  • Builders Risk Coverage
  • Commercial Articles Floaters
  • Difference in Conditions (DIC) Coverage
  • Electronic Data Processing Equipment Coverage
  • Fine Arts Coverage
  • Furriers Customers Coverage
  • Furriers Customers Excess Legal Liability Coverage
  • Installation Coverage
  • Patterns and Dies Coverage
  • Processing Risk Coverage
  • Scheduled Property Coverage
  • Signs Coverage
  • Transportation Coverage
  • Valuable Papers and Records Coverage
CRIME COVERAGES

Opportunities for criminal activity in the service sector are a direct function of the type of service performed. The single constant across all service businesses is that employees have access to both cash and stock, regardless of the type of business involved.

Other coverages that may be needed are determined by money-handling arrangements, the nature and extent of computer transactions and functions, and whether or not the business is considered a target. Fraudulent impersonation coverage could be very helpful to certain service operations because it covers loss through trickery.

Types Of Crime Coverages:

  • Computer and Funds Transfer Fraud Coverage
  • Employee Theft Coverage
  • Forgery or Alteration Coverage
  • Inside The Premises-Theft of Money and Securities Coverage
  • Inside The Premises-Robbery or Safe Burglary of Other Property Coverage
  • Money Orders and Counterfeit Money Coverage
  • Outside The Premises Coverage
SURETY COVERAGES

Nearly every service business must obtain appropriate licenses and permits to start and operate. Most municipalities require surety bonds as a means to guarantee that the business will conduct operations as mandated in the license or permit. Customer needs and demands may require additional types of bonds.

Types Of Surety Coverages:

  • Contract-Performance of Service or Supply Bonds
  • Court Bonds
  • Fiduciary Bonds
  • License and Permit Bonds
  • Miscellaneous Surety Bonds
  • Notary Public Bonds
  • Public Officials Bonds
COMMERCIAL LIABILITY COVERAGES

Many service businesses have significant off-premises operations and exposures that can cause either bodily injury to customers, property damage to their property or both.

Types Of Liability Coverages:

  • Commercial General Liability (CGL) Coverage
  • Employee Benefits Liability Coverage
  • Employment-Related Practices Coverage
  • Owners and Contractors Protective (OCP) Liability Coverage
  • Railroad Protective Liability Coverage
  • Special Events Liability Coverage
PROFESSIONAL LIABILITY COVERAGES

The commercial general liability policy does not cover loss or damage due to mistakes, errors and omissions of most professionals. For this reason, professional liability coverage specific to the profession involved is needed. Some of the policies or coverage forms that do so are listed below:

Types Of Errors And Omissions (E&O) Coverages:

  • Accountants Professional Liability Coverage
  • Architects or Engineers Professional Liability Coverage
  • Beauticians and Barbers Professional Liability Coverage
  • Errors and Omissions - Miscellaneous Coverage
  • Forensic Liability Coverage
  • Funeral Directors or Morticians Professional Liability Coverage
  • Insurance Agents and Brokers Errors and Omissions Coverage
  • Land Surveyors Professional Liability Insurance
  • Law Enforcement Liability Coverage
  • Lawyers Professional Liability Coverage
  • Mortgage Bankers and Servicing Agents Errors and Omissions Coverage
  • Registered Representative Errors and Omissions Coverage
  • Safety and Environmental Consultants Errors and Omissions Coverage
  • Title Abstractors Professional Liability or Errors and Omissions Coverage
COMMERCIAL AUTO COVERAGES

The vehicle fleets of most service operations are made up of private passenger autos, pickup trucks and vans. Some operations may even use medium-sized trucks to pick up and deliver customer goods. All these vehicles can be insured by a business auto policy.

Types Of Business Auto Coverages:

  • Auto Medical Payments
  • Business Auto Coverage
  • Collision Coverage
  • Comprehensive Coverage
  • Hired & Non-owned Auto Coverage (HNOA)
  • Uninsured/Underinsured Motorists Coverage
WORKERS COMPENSATION COVERAGES

Service businesses are required to provide coverage for employee injuries and must purchase the appropriate coverage or post a bond with the state. Services performed at locations on or near navigable waters may be subject to federal laws and corresponding additional insurance requirements.

Types Of Workers Comp Coverages:

  • Excess Workers Compensation Self-Insurance Bonds
  • Longshore and Harbor Workers' Compensation Act Coverage
  • Stop-Gap or Employers Liability Coverage
  • Workers Compensation and Employers Liability Coverage
EXCESS AND UMBRELLA COVERAGES

Professional liability coverage should be included with the other underlying general liability, automobile liability and employers liability coverages under an excess or umbrella liability policy whenever possible.

If the professional cannot be combined with other coverages, a separate excess liability policy over the professional liability policy, including all amendments and exclusions, should be purchased to provide additional limits on that exposure.

Types Of Excess Liability Coverages:

  • Excess Liability Coverage
  • Retroactive Excess Liability Coverage
  • Umbrella Coverage
AVIATION COVERAGES

Large service businesses having many locations or a wide geographic spread of clients may own or lease aircraft to assist them in conducting their operations more efficiently.

Types Of Aviation Coverages:

  • Aircraft Liability Coverage
  • Aircraft Passenger Liability Coverage
  • Aircraft Physical Damage (Hull) Coverage
OCEAN MARINE COVERAGES

A service business located near coastal areas or navigable waters might own boats or yachts and use them to entertain clients or employees. In these cases, a yacht policy is necessary for both property and liability exposures.

Types Of Ocean Marine Coverages:

  • Yacht Coverage
SPECIALTY COVERAGES

The insurance needs of any service business may go well beyond the coverages provided by standard industry coverage forms or policies. As an example, a number of service operations using drone technology as a part of the services they provide to their client. When coverages beyond the standard forms are needed, one or more of the following may be very important to a particular insured:

Types Of Specialty Coverages:

  • American Expatriate Coverage
  • Business Legal Expense Coverage
  • Commercial Credit Coverage
  • Cyber Liability Coverage
  • Data Security Breach Coverage
  • Directors and Officers Liability Coverage
  • Electronic Data Liability
  • Environmental Impairment Liability Coverage
  • Export Credit Insurance Coverage
  • Fiduciary Liability (Pension, Welfare and Employee Benefit Funds) Coverage
  • Identity Theft Insurance Coverage
  • International Insurance Coverage
  • Media/Communications Liability Coverage
  • Medical Personnel Service Agency Liability Coverage
  • Risk Retention Group Liability Coverage
  • Solar Energy System Coverage
  • Tax Liability Coverage
  • Tender Offer Defense Expenses Coverage
  • Transportation Brokers Contingent Cargo Coverage
  • Underground Storage Tank (UST) Liability Coverage
  • Unmanned Aerial Vehicles (UAV) (Drones)
  • Weather Coverage

Service Businesses Insurance FAQ - The Bottom Line

There are many commercial insurance policies available for Service Businesses. To find out what types of coverage your business needs, speak to a professional insurance broker with experience in insuring service businesses.

Frequently Asked Questions By Industry

Learn about the coverages available for specific industires with the Insurance FAQs below:

Service Businesses Insurance FAQ
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