Business Insurance for Professional Services Businesses

Professional services for small businesses need a Business Owner's Policy (BOP) that covers property and general liability, with important additional coverages such as workers compensation and commercial auto tailored to professional services businesses. You may also need coverage for a data breach, a growing concern for professional services providers. Professional liability coverage is also an important coverage to consider.

One thing all these diverse businesses have in common is the need to protect their businesses from catastrophe so they can focus on providing stellar service to their clients.

Here are just a few scenarios that could distract you from the work you do best, throw glitches into client projects and send you into damage-control mode:

• Property/Business Income: You return to the office on Monday morning ready to jump into client projects but find that a pipe in your kitchenette has burst, turning your office into a soggy mess. You send your employees home and call a contractor, who tells you it will take two weeks to repair the damage. In the meantime, you have nowhere to work.
• Property/Business Income: You're working on projects for several clients when a severe thunderstorm strikes. A bolt of lightning fries your computer system, halts your work and puts you behind schedule. Worse, you can't access important project details, and your business loses money while you try to recreate your records and recover lost work.
• Professional Liability: A promising new employee makes a mistake while working on a client project. The client suffers monetary damages as a result of the error, and files suit against your company.
• Cyber: You're in the middle of a project when a pop-up ad alerts you that your computer has been infested by malware. You find out sensitive client information may have been compromised by the virus. You need to call in professional help to fix the problem and do damage control.

How do you decide what kind of insurance your professional services company needs? No matter what type of professional service you provide, you can start with the basics, audit your business's unique needs, and add or subtract coverage as you see fit.

Here are some tips to help you choose the right coverage for your business:

• Cover your bases with a Business Owner's Policy. A Business Owner's Policy (BOP) is a basic essential and provides a solid base of coverage for a professional services business. A BOP may cover:
  • Property: Property coverage can offer protection for your office and its contents, whether you own or lease a building or work from home. The  property coverage can cover the building along with your computers, desks, chairs and other furniture and equipment.
  • General liability: A BOP typically includes general liability coverage which covers legal defense costs, judgments and settlements for bodily injury or property damage resulting from your business operations. This is the coverage that could kick in if a client trips and falls on a wet floor while at your office. This coverage may also include personal advertising injury that protects you from liability for publishing disparaging material or infringement of copyright in an advertisement for your business.
  • Professional Services - Property Enhancement: You may want to add specialized coverage geared toward the needs of professional services businesses, such as professional services coverage. Travelers' Professional Services Premier coverage includes 40 features to help protect your business. In the event of a loss, when Building and Personal Property (BPP) is included, the limit for damage to accounts receivables, valuable papers and records, data and media are increased, as well as a loss of income option for your billable hours and more.
  • Business Income and Extra Expense (BIEE): If you're forced to close your doors temporarily due to a covered disaster, BIEE may replace lost income, and help pay the extra costs of getting your business back up and running and minimizing downtime.
• Shield yourself from professional liability. General liability does not protect professional services providers against professional errors that could cost a client money and even lead to a lawsuit. You may want to consider professional liability coverage. It will protect your business if a client claims damages as a result of a mistake you made in delivering your services and decides to file a lawsuit. The costs to defend yourself can be significant.
• Protect your employees with workers compensation coverage. If you have employees or temporary workers you bring on for special projects, you may be required to provide workers compensation coverage. Even if it’s not required, it’s worth considering to help protect you and your employees avoid the real cost of an employee’s medical expenses and lost wages following a workplace injury or illness.
• Protect against employment-related litigation. In today’s increasingly litigious environment, you need to consider how to protect your professional services business from potential lawsuits. For example, Travelers’ Employment Practices Liability+ (EPL+) coverage helps to pay your legal costs and potential damages if an employee files a claim against you for discrimination, harassment or wrongful termination.
• Consider commercial auto. A single car accident can have a serious financial impact. If your business owns vehicles, you will also need commercial auto insurance. A commercial auto insurance policy can provide valuable financial protection to you and your employees while driving a company owned vehicle. It's important to know that a personal automobile insurance policy usually does not cover vehicles used in the operation of your business, under certain circumstances.
• Consider liability coverage for hired vehicles and/or non-owned vehicles. If your business does not own vehicles, consider coverage for autos you rent/hire or don’town that are used in your business. For example, when employees use their own personal auto to run business errands. In the event of an accident, coverage for hired and/or non-owned autos can provide protection for liability that would not be covered under your policy. Travelers offers hired/non-owned auto liability coverage as an endorsement to the Business Owner’s Policy. If your business owns vehicles, coverage would need to be added to your commercial automobile policy as described above.
• Consider physical damage coverage for hired vehicles. If your business does not own vehicles, you may also add hired physical damage coverage to your Business Owner’s Policy. Hired physical damage coverage covers damage to a rental vehicle or other vehicles you lease or borrow. If your business owns vehicles, coverage would need to be added to your commercial automobile policy.
• Protect your business from cyber risks. If you worry about cyber threats and databreaches, you're in good company: cyber risk is a top concern among businesses, according to the 2020 Travelers Risk Index. Protect yourself and your clients’ information with added cyber coverage. For example, Travelers CyberFirstEssentials^®–Small Business* offers coverage that is specifically tailored to help protect small businesses from the most common cyber risks.
• Consider an extra layer of protection. Want to sleep better at night? Consider a Commercial Umbrella policy. Umbrella insurance provides an additional layer of  financial protection over and above the coverage limits of your other liability policies. For example, Travelers offers an umbrella policy with up to $25 million in additional liability coverage to cover the costs of a covered loss.

Need advice tailored to the specific needs of your professional services business? Consult with an agent, who can help you customize coverage so you can get back to helping your clients make sure all their financial bases are covered.

*CyberFirst Essentials – Small Business is not available in all states.