“THE BIG FOUR” and WHY THEY ARE IMPORTANT
Most Process Service Agencies are familiar with the term Errors and Omissions Insurance, but E & O is only one piece of the insurance puzzle. The following will provide you with some information on what I like to call “The Big Four” and why they should be an important consideration for every owner, manager and firm. While not all policies are alike, most are based upon a foundation of common forms. Upon this foundation of coverage, you will find that each carrier provides additional coverage forms and exclusion forms to the policy. A basic rule of thumb is “if it’s not excluded – it’s included”, but it is vitally important to know what your particular policy will and will not provide protection for. Do you have Assault and Battery included? What about Care Custody and Control of other’s property? Lost Key Coverage? Will your business laptop be covered if stolen from your car? What about that expensive digital camera that you use in the course of business? I would encourage you all to take a few minutes, either with or without your agent, to conduct a quick review of you current coverage. How does your overall coverage stack up? Here then are “The Big Four” and their importance.
GENERAL LIABILITY INSURANCE – GL typically provides coverage for unintentional acts of bodily injury, property damage and personal and/or advertising injury. An example of personal injury would be slander, libel and defamation of character, of which claims have been on the rise lately through perceived nuisance suits. Bodily injury might stem from accidental injury to a client or subject through negligence of an employee or uninsured subcontractor. Property damage coverage would trigger should a third-party’s property be damaged during the course and scope of work performed. This does not include damage that is auto related, as auto is discussed later in this article. Medical payments are used to “appease” an injured client to avoid a medical claim. Your coverage limit can be used to pay small medical bills and other costs associated with an injury to avoid a liability claim or suit and can be used as a deterrent. Fire Damage is coverage to protect the insured from damage to a premise that you might rent, but do not own and is included in most GL coverage forms. You may want to check your monetary limit, as this coverage varies from carrier to carrier. All of these coverage parts are important aspects of General Liability Insurance and you should not have any excluded. Note – on some Errors & Omission policies that include General Liability, the carrier may exclude Personal and Advertising Injury from the General Liability coverage forms, only to give it back on the Professional Liability side. If you see it excluded form the GL, first check the E & O coverage parts to see if it was added back. This is done so as to not duplicate coverage.
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BUSINESS PERSONAL PROPERTY – You should be able to find BOPP policies in a number of markets today. This “package” policy will typically provide you the most bang for the buck and is filled with additional coverages specific to business owners. In the case of loss you will have a specified dollar limit to cover your business property (furniture/fixtures, computers, phone systems, copiers, etc.), valuable papers, business income and extra expense (limits to replace lost income and get you up and back in business fast), employee dishonesty, as well as, a plethora of other business specific coverages. It is important to make sure you are carrying adequate limits to protect your business assets. Your agent can help you with this determination. In addition, your classification is extremely important. Some classes carry general liability and some do not. For example, an attorney’s office class may come with GL and may have an option for Hired and Non-Owned Auto, which is terrific, but if a claim arises, triggered by those coverage parts that are misclassified, there is a chance your claim will not be paid. In the end, this would amount to paying premium for nothing. It is important to be working with an agent that understands your business, so that such pitfalls may be avoided.
PROFESSIONAL LIABILITY – Professional Liability is a synonymous term for both Malpractice Insurance and Errors and Omissions Insurance. This coverage is triggered when you commit an error or omission in your professional scope of work that causes financial damage to a third party. Examples of claims would be missing a filing deadline due to your direct negligence (getting lost on the way to courthouse, losing the document, etc), filing a document in the wrong court venue, serving the wrong subject, having a document lodged between your car seat and not noticing until the statue has run, errors on a proof of service, failing to conduct a proper foreclosure sale, posting a notice on the wrong property, etc. Remember, anyone can sue for anything – whether real, perceived or frivolous, claims can and do arise. If/when that claim does come in – who would you rather pay the defense costs – you – or your insurance carrier?
AUTO LIABILITY – Hired/Non-Owned Auto coverage is a very important factor to consider for any owner of a Process Service Agency. It can be added to some GL policies, can be purchased in conjunction with most Commercial Auto policies, and/or can be purchased as a monoline product (a stand alone policy). H/NAO is excess auto liability for claims that name the firm in a law suit for the actions of non-owned autos used for business purposes. Nonowned auto does not apply to corporate officers of the first named insured. In addition, it is coverage for the firm and does not extend damages to the employee/subcontractor. A typical example might be John/Jane Doe process server who is involved in an at-fault auto accident. Because he was “working” at the time of the accident, it is likely that your firm will be named in the suit. This coverage should provide you defense, as well as, cover any monetary damages above and beyond your server’s auto limits. Another important issue with Auto Insurance is that personal lines will rarely cross over to commercial use. It is vitally important for you and all of your field agents to not only have adequate limits of insurance, but that you/they have a “business use endorsement” on your/their auto policy. If it is found that you are using your vehicle for business use, your personal lines auto policy may decline to pay for damages. There you have it – The Big Four – as always, I encourage you to evaluate your current overall commercial coverage and shop around for your insurance needs. There ARE options and differences in coverage and pricing from carrier to carrier. If you make the decision to purchase insurance, take the time to make it an educated one, paying only what you need and only FOR what you need.
Note: The above coverage topics are what I consider to be the four most important, but are certainly not professed to be the ONLY coverages needed or available. Other topics to research or ask your agent about are Crime Insurance, Employment Liability (wrongful firing, sexual harassment, etc), Employee Benefits, Additional Insured requirements, Umbrella, Building (usually if you own), Blanketing coverages and more.
H. Eric Vennes is a former Process Service Agency owner of over 15 years. In 1994 he obtained his insurance license through the State of Washington and is currently Executive Producer at InsuranceTek, Inc. – a NAPPS endorsed insurance firm for the process service industry. Eric can be reached at 888-505-1555 to answer any questions you may have.
