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.
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:
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.
Following are some suggested commercial policies and coverages applicable for service businesses:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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:
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.
Learn about the coverages available for specific industires with the Insurance FAQs below: