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What Types of Insurance Does a Funeral Home Need?

What Types of Insurance Does a Funeral Home Need?

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What Types of Insurance Does a Funeral Home Need?

Funeral Home Insurance Quotes

Costs for business insurance can vary greatly, and getting insurance quotes from multiple companies is recommended in order to get the best pricing.

Coverwallet and Hiscox offer easy business insurance quotes at affordable prices.

What Types of Insurance Does a Funeral Home Need?

Funeral homes aid the family and friends of a deceased in what is often a sensitive time. Funeral homes provide many services to assist in end-of-life ceremonies and burials. Usually, funeral homes arrange funeral services, burials, cremations, and more.

Like most businesses, funeral homes are exposed to hazards through normal operations that lead to liabilities and losses. Since accidents occur, a funeral home needs insurance to protect against financial hardships that follow an incident.

Related: Guide to starting a funeral home

What Are Some Risks for a Funeral Home?

Risks vary from one business to the next, but some of the risks a funeral home is exposed to include:

  • Car accidents
  • Visitor injuries
  • Mistakes or errors in handling the deceased
  • Employee injuries

Car Accidents

One of the more prevalent risks is car accidents because funeral homes have many occasions where employees need to drive. For example, employees drive to retrieve the deceased, pick up floral arrangements and supplies, and lead funeral processions. Driving hazards that increase the risk of car accidents include poor weather conditions, low visibility, driver fatigue, traffic, and distracted driving.

In particular, damage to specialty vehicles (hearses and limousines) is costly because these vehicles sometimes require custom parts, which drives up the repair cost. Additionally, non-accident-related hazards (i.e., wind, hail, or theft) cause expensive vehicle damage.

Visitor Injury

Funeral homes regularly have patrons on-site for ceremonies, burials, and preparations. Large gatherings may increase injury liability risks, including claims for slips, trips, and falls. Additional visitor injuries include burns from candles and injuries from furniture or equipment. For example, displayed caskets and floral arrangements are items that commonly lead to insurance claims when they tip over and injure people nearby.

Mistakes or Errors

Mistakes or errors in handling a deceased can result in unfortunate repercussions for the funeral home and the decedent’s relatives and friends. Negligence is a significant liability risk for funeral homes. For example, a cremated body that was supposed to be embalmed can cause emotional distress and lead to a lawsuit. In addition, funeral homes may face lawsuits for improperly preserving a deceased body, failing to uphold religious preferences, mix-ups, and misprints in bulletins.

Another mistake funeral homes can make is non-compliance with the Federal Trade Commission’s rules for general pricing lists. For funeral homes, this rule dictates that they provide clients with a general list of associated funeral costs. Failing to comply can result in fines and civil lawsuits.

Employee Injuries

Employee injuries are another type of risk for funeral homes, especially for funeral homes that offer embalming services. An embalming service requires using a fluid that contains formaldehyde, which can injure employees if used improperly. The embalming fluid can cause skin, eye, and lung irritations. Further, embalming services are risky for employees as they may be exposed to diseases and infections while embalming a deceased.

Employees have additional injury risks similar to visitor injury risks. These risks are a liability for funeral homes, and some common examples include harm caused by falling objects, slips, trips, and falls.

Hiscox.com

What Insurance Policies Should a Funeral Home Consider?

Risks can be costly and a financial stressor for small businesses. However, insurance is designed to cover risk exposures, protecting the business’s financial well-being. As such, funeral homes should consider the following policies:

  • Commercial Automobile Insurance
  • Commercial Property Insurance
  • General Liability Insurance
  • Professional Liability Insurance
  • Workers’ Compensation Insurance

Commercial Auto Insurance 

Commercial auto policies protect businesses from liabilities resulting from car accidents and provide physical damage coverage for business-owned vehicles. Lawsuit expenses for at-fault accidents quickly add up, so funeral homes using vehicles in normal operations should protect themselves with an automobile insurance policy.

The primary coverage included in an automobile policy is liability coverage. This line of coverage offers financial protection for car accidents caused by the business and its employees. Liability insurance covers the following expenses:

  • Third-party medical bills
  • Third-party property damage repairs
  • Legal defense costs
  • Settlements

Physical damage is another line of coverage in an auto policy. Sometimes this coverage can be excluded, but a business may choose to include this coverage on valuable vehicles. Physical damage coverage usually has a deductible and insures business-owned vehicles for the following hazards:

  • Collision damage (collision coverage usually has a separate deductible)
  • Falling objects
  • Hail
  • Wind
  • Theft
  • Vandalism

Commercial Property Insurance

A property insurance policy is a core policy for many funeral directors due to the cost of a funeral home. This line of insurance covers business-owned structures and business-owned property for physical damage claims. Property insurance policies cover perils, including:

  • Fire
  • Wind
  • Hail
  • Vandalism
  • Theft
  • Water from leaking pipes

Structures are covered at their rebuilding cost, up to an agreed policy limit. Sometimes, the insurance company inspects the structure to evaluate the coverage amount needed. Additionally, property insurance covers business property up to an agreed coverage limit. However, the policy’s terms stipulate how the insurance company will pay for property damage. Generally, the policy covers business-owned property on a replacement cost basis or an actual cash value basis (which covers items at their replacement cost, minus depreciation).

General Liability Insurance

General liability is essential for funeral homes because it covers bodily injury or property damage claims occurring on-site or because of the funeral home’s actions. For instance, funeral homes with on-site visitors need this coverage to protect against expensive lawsuits that may result when a visitor is injured on the business’s premises.

Slips and falls are common bodily injury claims for many businesses, and funeral homes are no exception. A funeral home has a greater exposure to bodily injury claims since it hosts burials and ceremonies that often draw large gatherings. General liability covers expenses resulting from claims, such as the following:

  • Medical bills
  • Property damage repairs
  • Legal defense costs
  • Settlements

Professional Liability Insurance

Professional liability insurance offers coverage for errors and mistakes resulting from negligence or failure to provide a promised service. Funeral homes benefit from a professional liability policy since errors in preserving or treating a deceased can result in costly lawsuits.

A professional liability policy offers coverage for expenses, such as fees, legal expenses, settlements, and reimbursements. Since professional and general liability have similar coverage, it is best to insure both risks with the same insurance company to avoid disputes in claim coverage.

Workers’ Compensation Insurance 

Workers’ compensation insurance covers the costs associated with employee injuries. Some states require businesses with employees to carry a workers’ compensation policy. However, even in states where this policy is not required, a funeral home with employees benefits from having it. 

Workers’ compensation protects the business from potential lawsuits and aids the employee who incurs medical bills. This line of insurance offers coverage for costs, such as the following:

  • Medical expenses
  • Lost wages
  • Ongoing rehabilitation care
  • Disability income
  • Funeral expenses

How Much Does Funeral Home Insurance Cost?

The cost of funeral home insurance coverage depends on the funeral home’s risk exposures and coverage limits. For example, a funeral home with few employees and irregular customers will need far less coverage than a large funeral home with multiple employees and regular, wide-ranging services.

When insurance companies quote (i.e., price) a policy, they consider many factors. For example, an insurance company may consider the following factors:
– The size and condition of business-owned structures
– The number of vehicles needing insurance
– Any specialty vehicles, such as hearses or limousines
– Employee training and safety precautions
– The average or expected number of services and visitors on-site
– Any recent or current lawsuits or insurance claims

Since funeral home business insurance costs will vary between companies, the best way to determine the overall cost is to contact multiple companies. Using this method, you will be able to compare prices and coverage limits to pick the policies that best fit the funeral home’s needs.

What Types of Insurance Does a Funeral Home Need?

What Types of Insurance Does a Funeral Home Need?

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