Business Insurance For Service Businesses
Service business owners go to work with one mission: to serve the needs of their clients. But to best serve your business, it's important to have the right insurance coverage in place so you can practice your craft for many years to come.
Every business needs to be ready for unexpected events, such as high winds that rip off a roof or a break-in that results in the loss of expensive equipment. But each service business faces unique risks.
Here are a few scenarios that can cause a difficult situation for a service business owner:
- A dry-cleaning company is hired to clean and deodorize an expensive fur coat that got the short end of the stick after a family got a puppy. An employee uses a chemical that causes discoloration, and the client demands the coat be replaced.
- A wedding videographer leaves equipment in their truck for a few minutes while meeting with prospective clients. Upon returning, the videographer finds their window is shattered and their equipment has been stolen.
- A fashion designer arrives at their studio to find that their workspace has gone up in smoke because a neighbor forgot about a burning candle. They're unable to work for over a month and must replace all their equipment and supplies.
Which Service Businesses Is This Policy Right For?
Service business insurance protects small businesses providing specialized services to consumers and businesses, including:
- Dry Cleaners/Laundromats
- Funeral Homes
- Locksmiths
- Music Recording Studios
- Office Machine Repair Shops
- Packaging/Mailing Services
- Photographers/Videographers
- Tailors/Dressmakers
- Taxidermists
What Kind of Insurance Does My Service Business Need?
Your business is special, so how do you know which coverage to get? Start with the basics, and then adjust your coverage to suit your needs. Here’s some guidance to help you choose the right insurance.
First, you can begin to build your foundation with a Business Owner’s Policy (BOP). This typically covers:
Property
Do you own or lease an office, or run your business from a home office? No matter which scenario applies, it’s important to cover the property and equipment that allows you to serve your clients or customers. For example, Travelers’ BOP can cover Business Personal Property (BPP), even if that property is temporarily off the premises of your business.
General Liability (GL)
The general liability part of a BOP offers coverage for key exposures, such as premises liability, products and completed operations liability, and personal and advertising injury liability. This can cover a range of situations, such as a client tripping and falling in your office or a printer you repaired malfunctioning and injuring one of your customers.
Business Income and Extra Expenses (BIEE)
What happens if your building burns down or gets hit by a tornado and you can’t work for a month? Business Income and Extra Expenses can help cover the lost income and expenses you incur while you try to get back in business. Also, Travelers offers an optional Mobile Operations Vehicle Endorsement add-on that can cover the loss of business income due to physical damage to your covered mobile operations vehicle.
Employee Theft
You trust your employees, but it’s still important to protect your business against theft and dishonesty. For example, Travelers’ BOP automatically includes coverage for theft of money or securities through embezzlement, fraud or forgery.
Ramp up your BOP coverage based on your individual business and risks. For example, Travelers offers Power Pac PremierSM, an enhancement with over 40 expanded coverage features, including a limit of $250,000 on accounts receivable, spoilage, valuable records and other coverages. In addition, the XTEND Endorsement for Small Businesses provides a package of general liability enhancements.
Coverage Specific to Operations
You can also add coverage specific to the operations of your service business. For example, consider taking these steps:
Cover your bases for managing your employees
You wouldn’t be able to serve your customers without your employees, and that means hiring ‒ and sometimes firing. It's important to protect yourself, such as with Travelers’ Employment Practices Liability+SM (EPL+SM) coverage, which can cover costs stemming from claims alleging wrongful employment practices, such as discrimination or wrongful termination.
Cover customer goods in your possession
Do you repair rare musical instruments, clean expensive fur coats or tailor designer suits at your shop? You may need extra protection if you hold or store valuable goods owned by your customers. The Bailee’s Customers Goods endorsement is one option that can be added to the Master PacSM BOP. It helps to cover the value of customer goods that are in your possession, whether at the business or in transit.
Shore up against a cyber attack or data breach
Your customers trust you with their sensitive information, and a data breach could damage that relationship. That’s why it’s critical to have cyber liability coverage. Travelers’ CyberFirst Essentials® ‒ Small Business can help cover costs due to failing to prevent unauthorized access to, or use of, customers’ identity information.
Protect your business wheels
Do you depend on a vehicle registered to your business to serve clients or pick up supplies? If so, look into commercial auto insurance coverage. And, if you use hired vehicles, there is also coverage for hired and non-owned auto liability and hired auto physical damage.
Protect yourself with an umbrella policy
A commercial umbrella policy offers added liability coverage for catastrophic losses that exceed your coverage limits. For example, Travelers offers an umbrella policy for up to $25 million in additional liability coverage.
Put employee protection in place
Your ability to wow your customers may rest on a team of employees doing everything you can’t do alone. If you have employees, you may be required to purchase workers compensation insurance.
Protect valuable records
If a covered loss damages or destroys your valuable records, consider coverage that can help replace them.
Customize your business policy with these add-ons
Helps protect your bottom line from the costs of failing to prevent unauthorized access to, or use of, customer identity information. Covered expenses include customer notification (often mandatory), penalties and chargebacks imposed by credit card companies, court-awarded judgments, and more.
Best-in-class coverage enhancement with more than 40 expanded coverage features designed specifically for businesses that have more sophisticated insurance needs. Includes a Blanket Limit of $250,000 for Accounts Receivable, Spoilage, Valuable Papers and Records, Debris Removal and other key coverages.
EPL+ protects your business if an employee makes a claim alleging a wrongful employment practice such as discrimination. This helps cover legal expenses as well as potential settlement costs, up to the coverage limit.
General liability coverage enhancements include an extension of coverage to unnamed subsidiaries (other than partnerships and joint ventures) and a blanket waiver of subrogation that protects your trusted partners from recovery of damages we paid.
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