Payroll Service Provider Insurance Coverage Checklist
The coverages a payroll service provider business may carry — core, prevalent, and situational — why each matters, and the gap most often missed.
Pull out your current policy and check the box next to any coverage you can confirm is already in place — anything unchecked is worth a quick conversation with your advisor. Coverage checklist for payroll service providers, reporting agents, and payroll bureaus. Priorities reflect typical exposure for this class; confirm against your actual operations.
Tick each coverage you can confirm you carry — anything left unticked is a good question for your next policy review.
| Have it? | Coverage | Why this business needs it | Priority |
|---|---|---|---|
| Errors & Omissions (Technology / Professional) | Covers client penalties, interest, and losses from payroll and tax filing errors. | Core | |
| Commercial Crime (Incl. Client Property) | Covers employee theft of client funds; confirm third-party and client property coverage. | Core | |
| Cyber Liability | Covers breaches of SSNs and bank data and ransomware that stops payroll. | Core | |
| Funds Transfer & Social Engineering Fraud | Covers payroll diverted by fake bank-change requests or hacked ACH files. | Core | |
| General Liability | Covers premises and advertising injury claims. | Prevalent | |
| Directors & Officers Liability | Covers owners and officers in lender, investor, and client claims. | Prevalent | |
| Fiduciary Liability | Needed if you administer retirement or benefit plans. | Prevalent | |
| Employment Practices Liability | Covers claims from your own staff. | Situational | |
| Fidelity / Surety Bond | Some states, banks, and clients require bonds on funds handlers. | Situational | |
| Workers' Compensation | Required for your own employees. | Situational |
The coverage gap most often missed
The gap most often missed by payroll providers is crime coverage for clients' money. A standard crime policy covers the provider's own funds, but the dollars at risk belong to clients, and clients stay liable to the IRS for taxes you fail to deposit. MyPayrollHR's 2019 collapse left thousands unpaid. Confirm your crime policy includes client property and funds-transfer fraud, and that E&O covers tax penalties you cause.
Send us the checklist and we'll review your payroll service provider coverage line by line, then market it across multiple carriers that compete for your account.
Related: Payroll Service Provider Insurance · Payroll Service Provider Supplemental (apply) · All coverage checklists
Frequently asked questions
What insurance does a payroll service provider business need?
The core coverages for a payroll service provider business are Errors & Omissions (Technology / Professional), Commercial Crime (Incl. Client Property), Cyber Liability, Funds Transfer & Social Engineering Fraud. This checklist also lists the prevalent and situational coverages worth considering, with a plain-English note on why each matters.
Is this checklist insurance advice?
No. It is a free educational tool to help you have a more informed conversation with a licensed professional. It affords no coverage and is not insurance, legal, or financial advice — only your actual policy language governs what is and isn't covered.
Can Cory Washington & Co. review my payroll service provider coverage?
Yes. Share your checklist and we'll review your program line by line, market your account across multiple carriers, and explain the trade-offs in plain English. Cory Washington & Co. LLC is licensed in all 50 states.
This checklist is a free educational tool from Cory Washington & Co. to help you review your own coverage and have a more informed conversation with a licensed insurance professional. It is general information only — not insurance, legal, or financial advice, and not a recommendation to buy, change, or cancel any policy. Coverage terms, availability, limits, and requirements vary by policy, carrier, and state, and only the language in your actual policy governs what is and isn’t covered. Checking or leaving blank any item above does not indicate that you are adequately insured or under-insured. Using this checklist does not create a client, agency, or fiduciary relationship. Always consult a licensed professional about your specific situation.