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*This post was excerpted from the Insurance Issues article by David Pearsall, Business Insurers of the Carolinas, first published in the July/August 2017 issue of Pet Sitter’s World magazine.

From day to day, email to email, and phone call to phone call, I never know which client or prospect will be on the other end of the phone line or in my inbox. Each PSI member or prospective member I communicate with has their own individual needs and questions when it comes to insurance.

The fact remains that every business is subject to risk and most need some insurance to cover them. However, depending on whether your business is just getting started, you are hiring your first helper, making a switch from ICs to employees, or offering expanded services such as in-home boarding or dog training in addition to pet sitting, the coverages that will be applicable to your business varies. So let’s take a look at the coverages you should consider as your business grows.

Coverage considerations for newer pet-sitting businesses

In regards to those just starting out, I often hear from folks that have been pet sitting for another business or for their personal family and friends and wish to protect themselves if something were to go wrong. They are typically looking to expand their client base and protect themselves should pet(s) become injured, clients’ property get damaged, or a dog bite someone while in their care. Therefore, the first coverage we always recommend every pet sitter consider is general liability insurance coverage that includes coverage for pets and property in your care, custody or control (CCC). As many of you know, most general liability policies will exclude coverage for personal property (including pets) in your care, so it is important to choose the PSI Liability Policy or another liability policy on the market that includes coverage for pets and property in your care, including vet medical coverage. By far, the number one mistake we see from pet sitters—who often come to us in the second or third year of their businesses after they have incurred a claim—is that they did not realize they had little or no coverage for CCC, and/or vet medical coverage was limited under their former policies.

The second coverage request we see from startups and newbies is for a bond. Many aren’t even aware of what a bond does or what it will cover, but they see others that are insured and bonded, and wish to be as well! To be clear, a bond is not insurance. Instead, a bond is a guarantee to your clients that if your employee were to steal from them, they will paid for the stolen item(s)—as long as you have a high enough bond limit. Then, the bond company will seek restitution from the guilty party (the employee). Just as all liability policies are not the same, bonds vary as well. Most bonds will only cover employees and require a conviction clause. The PSI Bond includes coverage for owners as well as employees and independent contractors. The PSI Bond also does not require a conviction in order to reimburse your client. If you are just starting out, a bond is a great way to advertise your new business and show the general public that you are honest and they are protected, even if you know you will never steal from them. As you grow and begin bringing on helpers, you certainly will want to consider this coverage option and, perhaps, a higher limit to protect you and your clients should anything turn up missing while your staff sitter is taking care of their pets and has access to their homes.

A coverage mistake made by new and veteran sitters alike

Another mistake I often encounter from newer sitters (and some more experienced ones as well) is having a false assumption that general liability insurance covers injuries they sustain while pet sitting, such as being bitten by a client’s dog. Unfortunately, the only way to cover injuries you or your employees or independent contractors sustain while on the job is workers compensation insurance. Often workers compensation can be too expensive for a startup (even one single owner) and even those with one or two helpers, but it is important that pet sitters understand that most all states allow owner(s) to include themselves in coverage, and that many health insurers are now excluding medical claims that occur on the job.

In addition, workers compensation insurance not only pays medical claims, it also includes coverage to indemnify the injured worker (including lost wages if you or your employee is unable to go back to work after a few days). For this reason, and the fact that state laws often require employers to purchase it, workers compensation insurance is an important coverage to consider as your business grows and you begin having others work for you.  

Coverage options to consider when you add staff

If your business begins to hire employees, there are a couple of other exposures that come into play in addition to workers compensation coverage.  As the business owner, it is up to you to determine whether or not to insure for these exposures, but you should carefully consider your exposure, costs, and your tolerance for risk:

1. Non-Owned Auto Coverage.  This covers your business if your business is brought into a lawsuit due to a non-owned automobile causing bodily injury or property damage. An example of this would be your employee causes an accident in his or her personal vehicle while pet sitting (working for you). The employee’s personal auto insurance would be primary, but the business can be sued if the employee is working at the time of the accident, and/or the employee’s personal auto limit(s) are not high enough to cover the damages. This coverage can either be purchased under a commercial auto policy (if you insure your business vehicles), or as an endorsement to the PSI Liability Policy or via a Business Owners Policy.

2. Employment Practices Liability Coverage. This covers employment-related wrongful acts such as discrimination, sexual harassment, wrongful termination, employer retaliation, defamation, and failure to hire or promote claims brought by your employees. These policies can often be endorsed to include third-party claims, which covers wrongful acts alleged by non-employees, such as your clients or prospective clients that allege harassment or discrimination by your employees. This type of coverage can be expensive depending on the number of staff members your business employs, but these types of claims can be very expensive to defend against as well. You can expect to pay in excess of $1,000 annually for a $1,000,000 limit, or you can add a minimal coverage limit ($25,000-$50,000) under a Business Owners Policy. 

Additional coverage for additional services

Many pet-sitting professionals today also grow their pet-sitting businesses by offering expanded services such as in-home boarding/daycare, house sitting, dog training, pet grooming, or sales of pet treats, etc. Coverage for all of these services can be added under the PSI Liability Policy. If you want to offer (or are already offering) these different services in your pet-sitting business, it’s vital that you check with your liability insurer to be 100 percent sure you are covered. Under the PSI Liability Policy, all of the services listed above can be added by an endorsement, but some require additional underwriting in the form of supplemental applications. It’s also important to note that many other services, such as residential cleaning, concierge/delivery, landscaping etc., are excluded and may require a separate liability policy. It is always best to contact our office or your agent if you are considering expanding into other services to be certain you are covered.  Failure to do so could result in a problem at time of a claim!