Insurance agents should promote business service bonds


This post is part of a series sponsored by Old Republic Surety.

Business bonds and trust bonds are easy to sell to many commercial clients. Include them in the annual review of their coverages.

We like to believe that the service staff are honest and always keep the customer in mind. Unfortunately, an employee who works in a client’s home or business may be tempted to take something – jewelry, cash, gadgets, and a laptop. That happens, and when it does, a business services bond can cover the expenses of replacing the owner’s stolen or damaged property.

A business services bond is different from deed of fidelity, which protects the employer from employee theft, embezzlement, or computer fraud. A business services bond, or third-party trust bond, covers losses incurred by a third party—in other words, the customer. These bonds are for companies that have employees working on their clients’ premises.

Many types of businesses need to be covered

Sometimes referred to as custodial bonds, business service bonds cover any number of occupations — not just cleaners. Businesses that should consider this coverage include electricians, plumbers, contractors, repair services, operators, locksmiths, painters, exterminators, landscapers, gardeners, pool cleaners, pet groomers, maid services, and home health aides, to name a few.

White-collar professionals need business service bonds, too. IT consultants, computer technicians, real estate agents, interior decorators, caterers, teachers, music teachers, and salespeople are also candidates for this coverage.

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 business insurance lines. Simply make it a 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 sort of local exposure.

Some points worth noting:

  • Employers often think they are already covered I do not need this protection. General liability and property insurance do not cover this type of exposure. Coverage does not include packages such as Business Owners Policies (BOP).
  • Employers will tell you that their employees will never steal from the customer. Unfortunately, studies show that workplace theft is common. Business Services Protection gives your customers peace of mind in the event of a theft.
  • Purchasing business services coverage allows your customers to advertise themselves as “linked”. This is a real selling point for a service business. Clients often look for companies that are mortgaged or will require an obligating contractor. Link can be a competitive advantage for your customers.
  • Inexpensive business services bonds. A small business policy can be purchased for as little as $200 per year. These bonds also cover the owner of the business, so they are a good choice for individual owners who may not have any or only a few employees.
  • Conviction clause. Many states require a conviction before the bond covers the loss.

Easy to write and auto-renew

Business Services Cover Bonds are easy to write. No application or subscription required. All the agent has to do is log into Old Republic Surety’s BundstarTM Portal, enter some information about their client, then choose the level of coverage and number of employees. Old Republic offers limits up to $250,000 with zero discount. The process only takes a few minutes, and the policy is issued instantly. Policies renew automatically on an annual basis, and there is a discount on written policies for three years.

Since Old Republic offers these coverages through our online portal, subscription is automatic and can be issued quickly. Our rates are the same across the board, based on the number of employees and amount of coverage. This makes it easy to discuss coverages with your clients, and employers know up front the annual cost.

Agents also get a very competitive commission when putting in this business. While policy amounts are relatively small compared to other coverages you might write, commissions can add up. Given the relative ease of working position, it is well worth the effort. Plus, you’re offering valuable coverage to your customers that they may not even realize they need.

Foreign Service Bonds Specialization

The Old Republic also offers specialized offshore service bonds. This is a separate coverage designed to protect the client’s belongings during transit. A good example of this is a restaurant that provides valet parking. If a restaurant employee steals something from a customer’s car while it is parked, the policy will cover the cost of the stolen property. Specialized foreign services bonds also cover towing services, package delivery services, and vehicle recovery services.

Not long ago, baseball legend Alex Rodriguez (A-Road) broke the news when $500,000 worth of items was reported stolen from his car. If his vehicle was in the possession of a valet or towing service, these losses may have been covered by a specialist third-party service guarantee, particularly if the burglar was convicted as required by many states.

start today

Find out more about Old Republic Surety’s Business Services Bonds, Specialized Offshore Services Bonds, and BONDSTAR on our website. You can also contact Old Republic branch office To speak to one of our representatives.

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