Management services are part of the office administrative services industry. They provide a wide range of administrative services for other businesses, from financial and money management services (collections, bookkeeping, tax preparation), to property management services, logistics, general administration, and maintenance services.
While these types of services may not have a lot in common with each other, most management services companies face similar business risks that can be mitigated with tailored business insurance programs.
You can protect you management services company with the right insurance policies and the help of an independent insurance agent.
Why Do You Need Management Services Insurance?
Management services companies provide a wide range of office and administrative services to other businesses. Some typical management services include:
- Administrative Services
- Preparing and disseminating reports
- Human resources and personnel services
- Contract and insurance administration
- Financial and Money Management Services
- Preparation of financial reports
- Cash planning and budgeting
- Accounts payable and receivable, collections
- Accounting and tax services
- Property Management Services
- Marketing and leasing services
- Showings and applications, resident screening
- Lease preparation
- Maintenance Services
- Routine or daily maintenance
- Vendor supervision
- Selection and supervision of vendors
You are tasked with helping your clients perform certain day-to-day activities effectively, efficiently, and without costly mistakes or errors. Failing to provide services or making errors of any kind can have negative consequences.
You need to have a plan in place protect your business from risks such as lawsuits, property damage, accidents, theft, weather, and other unforeseen events. A comprehensive management services insurance plan is one of the best ways to protect your business when things go wrong. And since your firm is not the same as the firm down the street, your policies should be tailored to your unique needs.
Basic Management Services Liability Insurance
Management services have a relatively low risk for property and bodily injury lawsuits. But you still need to protect your business and your personal assets in the event that someone is injured on your property, if you cause someone to be injured at a client’s property, or if you damage someone else's property.
Commercial general liability (CGL) insurance: This offers broad coverage for lawsuits related to third-party bodily injury and property damage. For a management service, this might mean:
- A client, vendor, or delivery person slips and falls on your business premises
- You or an employee damages a client’s property
- You are accused of false advertising, slander, or libel
CGL insurance covers the costs of medical bills and replacing damaged property, as well as your legal defense if you are sued. If you are required to pay a settlement or judgment as a result of a lawsuit, your general liability policy will pay up to the limits of your policy.
Commercial umbrella insurance: This is another liability policy you might want to invest in. It provides excess liability protection to any of several other policies you might have, including commercial general liability, employer’s liability, and hired and non-owned auto liability. By purchasing one commercial umbrella policy, you essentially get higher limits on all of those policies, rather than having to raise the limits on each policy individually. Commercial umbrella insurance kicks in when the limits of your other applicable insurance policies have been exhausted, protecting you in the event that a claim exceeds the amount of coverage available from any other applicable policy.
Basic Management Services Property Insurance
Commercial property insurance: This protects your business property, whether it is a building that you own or the contents of your office space (computers, office furniture, supplies, etc.). If your business property is damaged by fire, weather, theft, or vandalism, your business property policy will pay to repair or replace it.
Business interruption coverage: Your property policy should also include business interruption coverage. This valuable coverage pays for ongoing expenses (rent, salaries, etc.) if you are unable to operate or must temporarily relocate after a covered loss (e.g., a fire).
Business owner policy (BOP): You may qualify for a BOP, which is a convenient package policy designed for small- to medium-sized businesses. With a BOP, you can have liability, property, and business interruption coverage in one affordable package customized or your business.
Talk to your independent insurance agent about whether or not you qualify for a BOP.
Management Services Professional Liability Insurance
Your job is to use your expertise in a variety of different administrative capacities to positively impact a client’s business. Some of management services may be more risky than others (e.g., accounting services, financial services, money management), with mistakes having the possibility of having devastating costs for your client.
If you make a mistake or an error in the services you provide, in many cases the client will simply fire you and walk away. But if they perceive the damage done to be great enough, there is a good chance they will sue you for damages.
If you were sued for professional negligence, would you be able to pay for all of the costs to defend yourself? Even if you know you have not been negligent, you will be faced with attorney fees, court costs, and perhaps even large settlements or court-ordered judgments. Where will you find the funds? Will you be able to continue to operate?
Professional liability insurance: Also known as errors and omissions insurance, this provides protection if a client sues you for negligence or other wrongdoing related to your work. Professional liability policies provide coverage for:
- Actual or alleged errors
- Professional negligence
- Breach of duty
- Misleading statements
- Claims resulting from the performance, or non-performance, of professional services
A professional liability policy covers defense costs, settlements, and judgments. Insurance companies offer customized policies that address the specific needs of different types of professional services firms.
A Note about Fiduciary Duty
Management services companies who act as accountants, money managers, or financial managers may in some cases assume the role of a fiduciary for their clients. A fiduciary is a person or group who holds assets for another party, often with the legal authority and duty to make decisions for the other party. An accountant or money manager who assumes fiduciary duty for his or her clients is obligated to act in the client’s best interest with good faith, loyalty, and the skill and care of a reasonably prudent person.
Accountant-client relationships are often not fiduciary. Acting as a fiduciary comes with a great deal of responsibility and risk for the accountant, and accountants often purposely avoid becoming a fiduciary precisely to avoid the added risk that it comes with. And in many cases, it is more important for the accountant to be completely independent from the client, rather to act on its behalf. However, accountants and money managers may assume fiduciary responsibility when they act as:
- Executor or personal representative of an estate
- Investment advisor
- Bankruptcy trustee or receiver
- ERISA employee benefit plan administrator
- Attorney in fact (one who holds power of attorney for taxes, financial matters, or healthcare)
If your management service acts in any of these capacities when you perform accounting or money management services, you need to understand the client-fiduciary relationship and what happens if you make a mistake. A mistake in these circumstances can expose you to lawsuits from clients or of other third parties. And your professional liability policies may limit or entirely exclude coverage for claims related to breaches in fiduciary duty.
Management services companies who act as a fiduciary in any circumstances must consult with an independent insurance agent about coverage for fiduciary liability exposures. Customized coverage may be purchased or added as an endorsement to your professional liability policy. In addition, an accountant who has a fiduciary responsibility for a company’s employee benefits plan in accordance with ERISA can purchase fiduciary liability insurance.
Where Else Do You Have Exposures?
You might need other types of management services insurance to ensure that you have no gaps in coverage. Talk to your independent insurance agent about the following:
- Computers and media coverage: Also called electronic data processing (EDP) insurance, this pays for lost data and related lost income if your computers or network are damaged by theft, vandalism, viruses, or malware. It may pay for loss of data or software and physical damage to computers or hardware.
- Cyber liability insurance: This provides coverage in the event of a data breach involving your business. It helps pay for the costs of notifying affected clients, as well as public relations and forensic costs, and more.
- Valuable papers coverage: This can help you reproduce damaged documents as well as move records or provide temporary storage for ledgers, financial statements, bank statements and other confidential records if they are damaged by a covered peril.
Your independent insurance agent can help you decide if you need additional business insurance for your management services company. You’ll likely need to consider the following:
- Workers’ compensation insurance
- Employment practices liability coverage
- Commercial auto insurance, or hired or non-owned commercial liability coverage (if you drive a personal vehicle for business purposes)
How Much Does Management Services Insurance Cost?
The cost of management services insurance depends on several factors, including the size of your business and the types of policies you need to cover all of your unique risks.
With so many variables (e.g., number of employees, physical assets of varying types and values, the location and size of your building or office space, the types of services you provide, the potential for errors and omissions), business insurance costs will vary among management services companies.
Find and Compare Quotes
An independent agent can work with you one-on-one to determine the types and amounts of coverage you need to protect you from a variety of costly problems. Your agent can get quotes from multiple insurance companies so you can evaluate the cost and coverage options and make the best choice.
Benefits of an Independent Agent
Our agents simplify the search process for finding the right management services insurance. They’ll walk you through the handpicked policy options and explain the details and options.
Most importantly, they’ll be there for you when claim time comes. They know the ins and outs of the process and will make sure your claim is handled appropriately.
The Lowdown on Online Quotes
Online quotes can be tempting. They are fast and easy to get — but are they accurate? And are you getting quotes for the right coverage? For business owners, choosing speed over accuracy can cost you.
Online quotes can’t and don’t see the whole picture. They can omit important coverage that will leave you devastated if something unexpected happens. And they can leave out cost-saving opportunities that an agent can help you take advantage of.
Instead of getting an online quote, find an independent insurance agent now, and get one-on-one consultation and affordable options for the best coverage for your unique needs.
TrustedChoice.com Article | Reviewed by Paul Martin
©2020, Consumer Agent Portal, LLC. All rights reserved.