Service Businesses Insurance FAQ

• At the minimum, most service busisnesses need prossional liability insurance or errors and omissions (E&O).
• Services businesses almost always need general liability insurance.
• If they have employees they will need workers compensation in most states.
• There are also other specialty coverages and endorsements that might be needed based on their operations.

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)

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 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

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

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

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

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

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

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

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

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