Given the myriad problems that can arise in the handling andpreparation of a dead person’s body, funeral homes face a number ofunique risks that must be addressed by their insurancepolicies.

Craig Shink, an experienced producer with Fabricant &Fabricant Inc. in Roslyn, N.Y., not only regularly handles suchpolicies—but also has seen firsthand the emotional damage that canbe inflicted on a family at a highly sensitive time when somethinggoes wrong.

“I’ve been to a funeral where the casket is dropped and the bodyspills out,” he says. “That creates emotional scars for variouspatrons of the funeral home.”

In one case in particular, the deceased “was a person of girth,and [the pallbearers] ended up dropping the casket. That’s the typeof case that [funeral home] Professional Liability wouldcover.”

(In many cases, pallbearersarranged for by the funeral home are the ones called upon to do theheavy lifting.)

EMOTIONAL E&O; CREMATION CONCERNS

As with any providers of professional services, funeral-homedirectors obviously need Errors & Omission coverage.

But what sets their risk profile apart from accountants,architects and others is that they are dealing with clients duringthe emotionally charged grieving period.

As such, great care and sensitivity are the watchwords for thosein the funeral-home industry. And if, for example, the family ofthe deceased isn’t happy with the job the funeral home did inpreparing a loved one for the final journey, the potential existsfor substantial emotional-injury claims.

For these reasons, funeral directors’ E&O coverage is amongthe top-of-mind risk-management concerns of the business, explainsEd Barclay, an agent with Eugene, Ore.-based Ward Insurance Agency(which is appointed with Allied Insurance).

Morticians’ E&O typically covers a funeral home for anydamage to a body, casket or urn while in the custody of the funeralhome.

Cremations fall under the normal E&O policy as well,“although companies seem to be underwriting cremations morecarefully now,” says Earl Schley, vice president of independentagency Bay Area Insurance in Annapolis, Md., and an activesupporter of the Maryland Funeral Directors Association. He hasserved on its board and developed its special safety groupinsurance program.

The reason for increasing concern around cremation: “There havebeen a couple of claims in the news lately involving crematories,so I think [carriers] want to know what safety precautions are inplace if there is a crematory, or if you have a certificate ofcoverage from the crematory you are using,” Schley says.

In some states, including New Jersey, many funeral homestypically aren’t the ones doing the cremations—those are handled bycrematories.

DEALING WITH THE DECEASED

Other Professional-Liability aspects of the funeral-homebusiness include presenting the wrong body for burial; having thebody go to the wrong cemetery; and burying the body in the wronggrave, after which the body has to be exhumed.

“Those are the core types of exposures thatfuneral homes have to be covered for,” notes Shink.

Also in consideration are storage issues with the body of thedeceased and dealing with the chemicals that are tools of the tradein embalming the body.

A funeral home can also typicallycarry Garage-Keeper Liability coverage and Power-Outagecoverage.

Then there’s insurance for the hearse used to carry the body tothe deceased’s final resting place. Auto-Liability coverage isneeded due to the pick-up of bodies and transportation to theinterment site.

“The transportation of the deceased many times can present risksfor the employee of the funeral home,” says Barclay. Speaking oftransportation, a hearse’s size and its typically slow pace presentanother set of risks. Carriers recognize the Auto-Coverageexposures through specific class codes for limousines, hearses andflower cars.

A typical, all-encompassing Funeral Directors Package wouldnormally consist of Property, Auto and General Liability (up to $1million), in addition to the Professional-Liability coverage uniquefor this business, Barclay notes. Due to the potential severeliability exposures, many Funeral Homes will carry an Umbrellapolicy.

STRONG CAPACITY; CARRIERS INCREASING

Compared to many other business types, producers say policiesfor funeral homes are considered inexpensive, given the industry’sgenerally favorable loss-history profile.

“It’s a great testament to the funeral industry that there ishuge potential for liability with funeral homes—but most are socareful and concerned about the bodies they work with thatinsurance is very inexpensive and easy to obtain,” observesSchley.

Among the carriers currently active in the space: Nationwide,Hartford, Travelers, Guard Insurance Group, Harleysville (acquiredby Nationwide last year), Federated Insurance and Leading InsuranceGroup Co.

“There are a few more companies writing it recently, becauseit’s a profitable piece of business,” says Shink, who adds thatcapacity is strong and that funeral-home coverage is increasinglyseen as a “mainstream” line at commercial carriers.

To learn more about risks specific to funeral homes, watch ourvideo below with Craig Shink and one of his clients.