Read on to learn the basics of the various types of insurance insureon offers service-based businesses.
General Liability for Service Businesses
General Liability Insurance protects owners of service businesses from expenses related to claims that your business caused property damage and physical injury. If, for example, a customer or other third party is injured on your premises and brings a lawsuit against your business, your General Liability policy would take effect.
In addition to paying for the legal cost of defending yourself against those claims, your General Liability coverage will pay for the settlement or judgment costs for which you are found liable, up to the limit of your policy.
If your business has a low risk profile, you may be eligible for a special kind of General Liability Insurance called a Business Owner’s Policy (BOP). The BOP combines General Liability and Property Insurance for one low premium, and often allows owners of service businesses to protect themselves affordably.
Your insureon agent can explain in more detail the ways in which General Liability Insurance can protect you and your business.
For owners of service businesses, Property Insurance can protect equipment (such as computers or other electronics), business premises (including an office or a storefront), and clients’ property in your custody or care.
Whether you purchase Property Insurance as an individual policy or as part of a BOP, it can offer valuable protection to the assets that allow you to serve your clients, bring in revenue, and keep your business thriving.
When you talk to your insureon agent, be sure to ask whether you should insure your property for its current value or its full replacement value. The latter will mean more expensive premiums, but will offer greater payouts in the event that you make a claim. The former will mean less expensive premiums but will provide you with only enough money to replace assets at their current market value.
Professional Liability Insurance / Errors & Omissions Coverage for Service Businesses
Errors and Omissions Insurance offers protection in the event that a client claims that your services caused him or her financial damages. E&O cases can be expensive to defend and payouts are sometimes tremendous.
Errors and Omissions Insurance protects you by paying for the cost of your legal defense as well as the cost of any damages for which you are found liable. Even if the charges against you are unfounded, E&O Insurance can be invaluable: often simply paying for the cost of defending yourself against claims can reach the tens of thousands of dollars.
Even service professionals who have never been sued and who are extremely careful in their work may want to consider Errors & Omissions Insurance. If just one dissatisfied client brings charges against you, your policy could prevent you from tapping into your business assets or draining your personal bank account to pay for the costs involved.
Workers’ Compensation Insurance for Service Businesses
Whether you employ only yourself or dozens of team members, Workers’ Compensation Insurance can help protect you and your business. Workers’ Compensation protection offers payments in the event that an employee who was injured or made sick on the job sues your business to cover the costs associated with medical treatment.
Like other kinds of business insurance, Workers’ Compensation Insurance pays for not only the legal costs you’ll incur defending yourself against your employee’s claims but also for any judgment or settlement costs for which you are found legally responsible. It may also pay for wages that your employees are unable to earn while they are recovering from the illness or injury.
Depending on where you live in the country, you may even be required to carry Workers’ Compensation – an insureon agent can help you understand the laws in your area and how they apply to your business.
When you discuss your Workers’ Comp needs with your insureon agent, be sure to find out whether you’re required to have insurance for 1099 contract workers in addition to coverage for your full- and part-time W2 employees.
Excess Liability Insurance / Umbrella Coverage for Service Businesses
One of the simplest ways to expand your business insurance coverage is to purchase an Umbrella Insurance policy. Umbrella Insurance (sometimes called Excess Liability Insurance) adds extra coverage beyond what your standard policies offer.
Umbrella Insurance works like this: if you’re found liable for $600,000 in damages but your General Liability Insurance has a $500,000 limit, your Umbrella policy would cover the additional $100,000. Without Umbrella coverage, you would be responsible for paying the extra amount out of your personal funds.
Your Umbrella policy can offer you additional protection on several insurance policies simultaneously, and typically comes with a relatively low premium. Raising the coverage limits on your individual policies is typically much more expensive than buying a single Umbrella policy.
It’s important to know, however, that Umbrella Insurance cannot be applied to an Errors and Omissions policy.
Use contracts whenever you can.
Establishing clear guidelines in writing for the services you are expected to deliver to your clients can head off potential problems that could lead to lawsuits down the road. Consider working with an attorney to draft a contract that can be adapted for a number of situations.
Consider covering key people in your business.
Some businesses are eligible for a kind of insurance called Key Persons Insurance, which provides coverage in the event that something happens to the people most important to running your business and prevents you from carrying our normal operations.