Insurance Agents Should Promote Business Service BondsPosted by Shayne Albine
We like to think that service employees are honest and always have the customer in mind. Unfortunately, an employee working in a customer’s home or business may be tempted to take something — jewelry, cash, tools, a laptop. It happens, and when it does, a business services bond can cover the expense of replacing the owner’s stolen or damaged property.
A business services bond is different from a fidelity bond, which protects an employer against employee theft, embezzlement or computer fraud. A business services bond, or third-party fidelity bond, covers losses suffered by a third party — in other words, the customer. These bonds are for businesses that have employees who work on their customers’ premises.
Many types of businesses need coverage
Sometimes referred to as janitorial bonds, business services bonds cover any number of occupations — not just janitors. Businesses that should consider this coverage include electricians and plumbers, contractors and repair services, movers, locksmiths, painters, exterminators, landscapers and gardeners, pool cleaners, pet sitters, maid services, and home health aides, to name a few.
White-collar professionals have a need for business services bonds, too. IT consultants and computer technicians, real estate agents, interior decorators, caterers, tutors, music teachers, and salespeople are candidates for this coverage as well.
Agents can help their clients better understand the need for this insurance by bringing it up when it’s time to renew their general liability, property, and other lines of commercial insurance. Simply make it part of your annual review of their coverage. Ask them if they have employees who work outside the office. You’d be surprised how many companies have some type of on-premises exposure.
A few points worth noting:
- Employers often think they are already covered and don’t need this protection. General liability and property insurance don’t cover this type of exposure. Neither do bundle coverages such as business owners' policies (BOP).
- Employers will tell you their employees would never steal from a customer. Unfortunately, studies show that workplace theft is a common occurrence. Business services protection gives your clients peace of mind should a theft occur.
- The purchase of business services coverage allows your clients to advertise themselves as “bonded.” This is a real selling point for a services business. Customers often look for companies that are bonded or will require that a contractor be bonded. Being bonded can be a competitive advantage for your clients.
- Business services bonds are inexpensive. A policy for a small business can be purchased for less than $200 a year. These bonds also cover the owner of a company, so they are a good choice for sole proprietors who may not have any or just a few employees.
- Conviction clause. Many states require there to be a conviction before the bond will cover the loss.
Easy to write and automatically renews
Business services bonds are an easy coverage to write. No application or underwriting is required. All an agent has to do is log in to Old Republic Surety’s BONDSTARTM portal, enter some information about their client, and then choose the level of coverage and number of employees. Old Republic offers limits of up to $250,000 with a zero deductible. The process only takes a few minutes, and the policy is issued immediately. Policies renew automatically on an annual basis, and there is a discount on policies written for a three-year term.
Because the Old Republic offers these coverages through our online portal, the underwriting is automatic and they can be issued quickly. Our rates are the same across the board, based on the number of employees and the coverage amount. This makes it easy to discuss coverages with your clients, and employers know upfront what their annual cost will be.
Agents also earn a very competitive commission when placing this business. While the policy amounts are relatively small compared to other coverages you may be writing, the commissions can add up. Given the relative ease in placing the business, it is well worth the effort. Plus, you are providing valuable coverage to your clients that they may not be aware they need.
Specialty outside services bonds
The Old Republic also offers specialty outside services bonds. This is a separate coverage designed to protect a customer’s property when in transit. A good example is a restaurant that provides valet parking. If a restaurant employee steals something from a customer’s vehicle while parking it, the policy will cover the cost of the stolen property. Specialty outside services bonds also covers towing services, package delivery services, and vehicle repossession services.
Not too long ago, baseball legend Alex Rodriguez (A-Rod) made news when it was reported that items worth $500,000 were stolen from his vehicle. Had his car been in the possession of a valet or towing service, those losses may have been covered by a specialty outside services bond, particularly if the thief was convicted as required by many states.*
* Some states require a conviction before the bond will cover the incident.
Get started today
Find out more about Old Republic Surety’s business services bonds, specialty outside services bonds, and BONDSTAR on our website. You can also contact an Old Republic branch office to talk to one of our representatives.
Shayne Albine is the Southeast Regional Vice President of Commercial Surety for Old Republic Surety. Before joining Old Republic Surety Company in 2013 as a Senior Commercial Underwriter, she was an Account Underwriter of Bond and Specialty Insurance for Travelers.