Given the myriad problems that can arise in the handling and preparation of a dead person’s body, funeral homes face a number of unique risks that must be addressed by their insurance policies.
Craig Shink, an experienced producer with Fabricant & Fabricant Inc. in Roslyn, N.Y., not only regularly handles such policies—but also has seen firsthand the emotional damage that can be inflicted on a family at a highly sensitive time when something goes wrong.
“I’ve been to a funeral where the casket is dropped and the body spills out,” he says. “That creates emotional scars for various patrons 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 type of case that [funeral home] Professional Liability would cover.”
(In many cases, pallbearers arranged for by the funeral home are the ones called upon to do the heavy lifting.)
EMOTIONAL E&O; CREMATION CONCERNS
As with any providers of professional services, funeral-home directors obviously need Errors & Omission coverage.
But what sets their risk profile apart from accountants, architects and others is that they are dealing with clients during the emotionally charged grieving period.
As such, great care and sensitivity are the watchwords for those in the funeral-home industry. And if, for example, the family of the deceased isn’t happy with the job the funeral home did in preparing a loved one for the final journey, the potential exists for substantial emotional-injury claims.
For these reasons, funeral directors’ E&O coverage is among the top-of-mind risk-management concerns of the business, explains Ed 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 any damage to a body, casket or urn while in the custody of the funeral home.
Cremations fall under the normal E&O policy as well, “although companies seem to be underwriting cremations more carefully now,” says Earl Schley, vice president of independent agency Bay Area Insurance in Annapolis, Md., and an active supporter of the Maryland Funeral Directors Association. He has served on its board and developed its special safety group insurance program.
The reason for increasing concern around cremation: “There have been a couple of claims in the news lately involving crematories, so I think [carriers] want to know what safety precautions are in place if there is a crematory, or if you have a certificate of coverage from the crematory you are using,” Schley says.
In some states, including New Jersey, many funeral homes typically aren’t the ones doing the cremations—those are handled by crematories.
DEALING WITH THE DECEASED
Other Professional-Liability aspects of the funeral-home business include presenting the wrong body for burial; having the body go to the wrong cemetery; and burying the body in the wrong grave, after which the body has to be exhumed.
“Those are the core types of exposures that funeral homes have to be covered for,” notes Shink.
Also in consideration are storage issues with the body of the deceased and dealing with the chemicals that are tools of the trade in embalming the body.
A funeral home can also typically carry Garage-Keeper Liability coverage and Power-Outage coverage.
Then there’s insurance for the hearse used to carry the body to the deceased’s final resting place. Auto-Liability coverage is needed due to the pick-up of bodies and transportation to the interment site.
“The transportation of the deceased many times can present risks for the employee of the funeral home,” says Barclay. Speaking of transportation, a hearse’s size and its typically slow pace present another set of risks. Carriers recognize the Auto-Coverage exposures through specific class codes for limousines, hearses and flower cars.
A typical, all-encompassing Funeral Directors Package would normally consist of Property, Auto and General Liability (up to $1 million), in addition to the Professional-Liability coverage unique for this business, Barclay notes. Due to the potential severe liability exposures, many Funeral Homes will carry an Umbrella policy.
STRONG CAPACITY; CARRIERS INCREASING
Compared to many other business types, producers say policies for funeral homes are considered inexpensive, given the industry’s generally favorable loss-history profile.
“It’s a great testament to the funeral industry that there is huge potential for liability with funeral homes—but most are so careful and concerned about the bodies they work with that insurance is very inexpensive and easy to obtain,” observes Schley.
Among the carriers currently active in the space: Nationwide, Hartford, Travelers, Guard Insurance Group, Harleysville (acquired by Nationwide last year), Federated Insurance and Leading Insurance Group Co.
“There are a few more companies writing it recently, because it’s a profitable piece of business,” says Shink, who adds that capacity is strong and that funeral-home coverage is increasingly seen as a “mainstream” line at commercial carriers.
To learn more about risks specific to funeral homes, watch our video below with Craig Shink and one of his clients.