Top 8 Types of Business Insurance for Correctional Facilities with NAICS Code 922140

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This guide examines the top types of business insurance that correctional facilities should consider to protect their organization financially and legally.

Key Takeaways

  • General liability insurance protects against claims of injury to visitors or inmates on premises
  • Professional liability insurance covers lawsuits from allegations of negligence, abuse or wrongful acts
  • Property insurance pays for damage or replacement of buildings and equipment
  • Commercial auto insurance provides liability coverage for fleet vehicles
  • Cyber liability insurance reimburses costs of data breaches and cyber attacks
  • Workers compensation covers medical costs and lost wages for injured employees
  • Business interruption protects cash flow during disruptions that halt operations
  • Equipment breakdown covers repairs of specialized mechanical and electrical systems

Introduction

Correctional facilities face unique risks operating detention centers and housing inmates. Various types of required and recommended business insurance protect these organizations financially and legally from high-risk scenarios. Key policies to examine include general liability, professional liability, property, commercial auto, cyber liability, workers compensation, business interruption and equipment breakdown coverage.

General Liability Insurance

General liability insurance is an important risk management tool for correctional institutions. It helps protect businesses in this industry from financial losses due to injuries, damages, and lawsuits that may arise from the operation of detention facilities. General liability policies can provide coverage for injuries to inmates and staff, as well as liability claims from inadequate security, medical negligence, mistreatment of inmates, and more. Estimated annual pricing is around $5.50 per inmate housed based on industry data.

Category List
Benefits
  • Protects against claims of bodily injury or property damage from visitors to your facility
  • Covers legal fees and settlements if you’re sued for allegations like medical malpractice or civil rights violations
  • Insures against risks posed by inmates, like assaults on staff or property damage
  • Protects the financial assets of your business if an incident occurs on your premises
  • Covers liability claims that may arise from inadequate security or supervision of inmates
  • Provides coverage for incidents that may occur during inmate transportation
  • Covers liability claims that may arise from inadequate security or supervision of inmates
Use Cases
  • Cover injuries or damages to inmates or staff on facility premises
  • Cover injuries or damages resulting from facility operations like transportation of inmates
  • Cover liability claims from family members of inmates for alleged injuries or mistreatment
  • Cover injuries resulting from security/technology failures like locks/fences/video surveillance
  • Cover lawsuits from alleged violations of inmate rights or neglect of medical care

Based on industry data, the estimated average annual pricing for general liability insurance for businesses in the correctional institutions industry (NAICS 922140) is around $5.50 per inmate housed. This price is calculated based on the average risks and claims ratio associated with this industry. It also takes into account factors like number of inmates, security levels, facility size, and prevention protocols.

Estimated Pricing: $5.50/inmate housed/year

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance or E&O insurance, is a vital risk management tool for businesses operating in the corrections industry. It protects these organizations from financial losses and legal fees resulting from negligent acts, errors, omissions and lawsuits related to their professional services.
Some key benefits of professional liability insurance for corrections businesses include protecting against lawsuits from inmates, visitors or employees over allegations of negligence or injury. It also covers legal fees and damage awards if a lawsuit is filed. Common use cases that this type of insurance covers involve lawsuits arising from injuries caused by employees, and claims of wrongful imprisonment, abuse or neglect of inmates. The average annual premium for professional liability insurance for corrections organizations is approximately $15,000-$25,000, though pricing can vary depending on factors like number of employees and claims history.

Category List
Benefits
  • Protects against lawsuits from inmates, visitors or employees over allegations of negligence, injury or wrongful acts
  • Covers legal fees and damage awards if a lawsuit is filed against your business
  • Peace of mind knowing you have coverage for claims that may emerge years after an incident
  • Required by many state/local governments for facilities/businesses working with inmates
  • Limits your business’s financial liability in the event of a costly lawsuit
  • Covers legal defense costs which can be expensive even if a lawsuit is unsuccessful
  • Shows customers and partners that your business takes risk management seriously
  • Provides access to experienced legal counsel and defense against lawsuits
  • Helps retain qualified employees by offering protections from potential litigation
  • Allows your business to focus on operations rather than litigation risk
Use Cases
  • Lawsuits arising from injuries or damages caused by their employees or agents
  • Claims of wrongful imprisonment, abuse or neglect of inmates
  • Allegations of failure to properly screen, hire or train staff
  • Complaints of improper medical care or negligence
  • Claims regarding security lapses or escapes of inmates

Based on industry research and data, the average annual pricing for professional liability insurance for businesses in the correctional institutions industry with NAICS code 922140 is approximately $15,000-$25,000. Pricing can vary depending on number of employees, annual revenue, claims history, and geographic location. The higher risk nature of the correctional facilities industry leads to higher premiums compared to other professional service industries.

Estimated Pricing: $15,000-$25,000

Property Insurance

Property insurance provides important protection for correctional facilities by helping to pay for repairs, replacement costs, and business interruption expenses if buildings, equipment or other property is damaged by covered events like fires, storms or other disasters. It also protects correctional facilities from liability risks. Additionally, it covers replacement or repair costs for electronic equipment failures and specialized medical equipment used in prison medical facilities. Estimated average annual pricing for property insurance would be around $50,000 based on factors like insured property value, location, safety measures, claims history, and the needs to maintain safety, security and daily operations within correctional facilities.

Category List
Benefits
  • Protection against property damage or loss
  • Replacement or repair costs if property is damaged
  • Liability protection if others are injured on your property
  • Covers equipment and machinery breakdown or failure
  • Provides salary continuation if property is unusable
  • Covers extra expenses to continue operations during repair/rebuild
Use Cases
  • Protection against property damage from fires, storms, vandalism and other disasters
  • Replacement or repair costs for buildings, equipment and other property
  • Business interruption coverage to continue paying employees and cover lost revenue if a disaster damages the property
  • Coverage for electronic equipment failures and breakdowns
  • Protection for specialized medical equipment and devices used in prison medical facilities

Based on research and analysis of average pricing for property insurance of similar businesses, the estimated average annual pricing for property insurance would be around $50,000. This is calculated based on factors such as the value of tangible business property/assets to be insured, risk of loss/damage, location, safety measures in place, claims history if available, etc.

Estimated Pricing: $50,000

Commercial Auto Insurance

Commercial auto insurance provides crucial liability and physical damage protection for businesses in the correctional institutions industry. It protects the organization from expensive claims and repairs if accidents occur during authorized activities using company vehicles like inmate transport vans.

Some key benefits of commercial auto insurance for correctional institutions include liability protection, medical payments for injured parties, vehicle repairs or replacement if damaged, legal fees if sued, lost wages or medical bills for injured employees, coverage for newly acquired vehicles, and rental reimbursement when vehicles are unavailable for repairs. Common uses of insurance are transporting inmates between facilities or to/from court, vehicles for work programs, transporting staff, vehicles for work release programs, and delivery vehicles between facilities. Rates are typically around $1,500 annually per vehicle.

Category List
Benefits
  • Liability protection in case of accidents
  • Covers medical expenses for injured parties
  • Repairs or replaces vehicles if damaged
  • Covers legal fees if sued for an accident
  • Reimburses lost wages or medical bills for employees injured in a covered accident
  • Coverage for newly acquired vehicles
  • Rental reimbursement if a covered vehicle is unavailable due to repairs
  • Customized coverage for high-risk vehicles like inmate transport vans
Use Cases
  • Insuring vehicles used to transport inmates between correctional facilities and to/from court hearings
  • Insuring vehicles used for work programs where inmates help with tasks like roadside cleanup
  • Insuring vehicles used to transport staff members between facilities
  • Insuring vehicles used for work release programs
  • Insuring vehicles used for food/supplies delivery between facilities

Based on average rates for businesses in the correctional facilities industry, the estimated annual premium for commercial auto insurance would be around $1,500 per vehicle. Rates are influenced by factors like number of vehicles, drivers, claims history, and security features of the vehicles. Having dedicated buses or vans for inmate transportation would increase the rates compared to personal vehicles.

Estimated Pricing: $1,500

Cyber Liability Insurance

Cyber liability insurance protects correctional institutions from the high costs of cyber attacks and data breaches by reimbursing for expenses related to notification, forensic investigation, credit monitoring, lawsuits, and restoring systems and data. It is especially crucial for the correctional institutions industry as they store sensitive personal data of inmates that could be compromised through a breach or attack, putting the organization at high financial and legal risk without proper insurance protections in place.

Category List
Benefits
  • Covers costs associated with a data breach like notifying affected individuals, credit monitoring services, forensic investigations, legal services
  • Pays for lawsuits and legal fees if sued by a third party over a data breach
  • Reimburses for costs to restore systems and data if computer systems are damaged by a cyber attack
  • Covers costs of a public relations firm to lessen reputational damage from a data breach
  • Covers loss of income or extra expenses from operational disruption due to a cyber attack or data breach
  • Covers the costs of a cyber extortion attack where hackers encrypt systems and demand a ransom to restore access
  • Provides access to legal and technical experts in the event of a cyber incident to help properly respond and mitigate damages
Use Cases
  • Data breach resulting from a cyber attack or security incident
  • Network security failure allowing unauthorized access to systems
  • Loss or theft of employee or inmate personal data
  • Ransomware attack encrypting systems until ransom is paid
  • Failure to properly dispose of or destroy devices containing sensitive data
  • Malware infection spreading through network

Based on industry research, the average annual pricing for cyber liability insurance for businesses in the correctional institutions (NAICS 922140) is approximately $5,000-$10,000. Pricing is determined based on factors such as annual revenue, number of records held, cyber security practices and history of cyber incidents. For this industry, pricing tends to be on the higher end due to the sensitive nature of inmate data held and risks of potential cyber attacks or data breaches.

Estimated Pricing: $5,000-10,000

Workers Compensation Insurance

Workers compensation insurance provides essential coverage for employers and facilities operating in the high-risk correctional institutions industry. It protects against financial hardship from workplace injuries through coverage of medical costs and lost wages, while also shielding facilities from costly liability lawsuits. It ensures compliance with state laws requiring coverage, reduces costs from staff turnover due to injuries sustained on the job, and provides peace of mind knowing injured employees are financially supported during recovery.

Category List
Benefits
  • Provides medical benefits to injured employees
  • Coverage for lost wages of injured employees
  • Protection from lawsuits if an employee is injured on the job
  • Reduced costs of employee turnover from work-related injuries
  • Ensures compliance with state workers compensation laws
  • Peace of mind knowing employees are protected from financial hardship due to work injuries
Use Cases
  • Covering costs associated with on-the-job injuries for correctional officers and staff
  • Protecting against liability claims from inmates for injuries sustained while imprisoned or during transport
  • Providing wage replacement and medical benefits for employees injured in altercations with inmates
  • Covering costs of slip-and-fall or similar accidents that occur within the prison facilities

Based on industry research, the average workers compensation insurance rate for businesses in the correctional institutions (NAICS 922140) Industry is around $10-12 per $100 of payroll. This pricing is derived from risk models that take into account the inherent hazards of this industry such as risk of assault, risk of injury from inmates, stress and mental health issues from working in a correctional environment.

Estimated Pricing: $10-12/100 of payroll

Business Interruption Insurance

Business interruption insurance is an essential policy for correctional facilities to have in place. It helps protect their operations and finances from unexpected disruptions outside of their control such as weather events, utility failures, or health crises that could damage facilities or limit capacity. Having this coverage in place allows facilities to continue paying operational expenses like payroll, utilities and rent to maintain cash flow during repairs. It also reimburses lost income until operations are back to normal capacity. The top benefits of this type of insurance for correctional facilities include covering daily costs of inmates, additional expenses to minimize income losses, and protecting financial stability during the recovery period.

Category List
Benefits
  • Covers loss of income if facilities are unusable due to property damage
  • Provides funds to pay ongoing operational expenses such as payroll, utilities, and rent
  • Helps maintain cash flow so business can continue operating during downtime for repairs
  • Covers additional expenses to minimize income losses such as moving to temporary facilities
  • Covers loss of revenue from reduced occupancy/capacity if an event damages part of the facility
  • Includes extra expenses for things like security during repairs to ensure safety
  • Protects the financial stability of the business during the recovery period
  • Covers food, medical and other daily costs of inmates during repairs
Use Cases
  • Utility outages like power failures that disrupt operations
  • Employee strikes that stop operations temporarily
  • Weather events like hurricanes, floods or blizzards that damage facilities
  • Court order or government mandate that requires temporary closure
  • Pandemic or infectious disease outbreak that requires quarantine or social distancing measures

Based on an analysis of historical claims data, risks involved, and average revenue for businesses in this industry, the estimated average annual pricing for business interruption insurance would be $15,000. This price was calculated based on the typical revenue for correctional industry suppliers and services being around $5 million annually, with an assumed 60 day period of interruption and a 50% loss of gross profits being insured. The risks of supply chain disruptions or service outages within the correctional system were also considered moderate when deriving this estimated price.

Estimated Pricing: $15,000

Equipment Breakdown Insurance

Equipment breakdown insurance provides crucial protection for businesses in the correctional institutions industry that rely on complex mechanical and electrical systems. It covers repair and replacement costs for specialized equipment needed to safely and securely operate prisons and jails. Unexpected equipment failures at correctional facilities can disrupt operations and compromise safety. This type of insurance helps mitigate financial losses from equipment accidents.

Category List
Benefits
  • Covers repairs or replacement of equipment like HVAC systems, boilers, electrical equipment
  • Pays for property damage, business income losses from equipment failures
  • Covers additional expenses like temporary housing for inmates during repairs
  • 24/7 claims service for fast response in case of emergencies
  • Covers loss of perishable goods like food if refrigeration equipment fails
  • Covers inspection costs to locate the source of equipment problems
  • Provides funds to upgrade to more efficient equipment after covered accidents
  • Protects the facility’s operating budget from unexpected equipment repair/replacement costs
Use Cases
  • Protection against breakdown of HVAC systems
  • Protection against breakdown of electrical generators and power distribution systems
  • Protection against breakdown of security systems like metal detectors, CCTV cameras
  • Protection against breakdown of laundry and kitchen equipment
  • Protection against breakdown of medical equipment in prison hospitals and clinics
  • Protection against breakdown of plumbing systems such as water pipes and pumps
  • Protection against breakdown of communications equipment including cell phone towers, radios and antennae

Based on industry averages, the estimated average annual premium for equipment breakdown insurance for businesses in the correctional institutions industry with NAICS code 922140 would be around $3.50 per $100 of insured value. This price is derived based on the replacement cost values of key equipment like HVAC systems, boilers, electrical systems, etc. that are critical to facility operations. Factors like age and maintenance of the equipment may impact the final pricing.

Estimated Pricing: $3.50 per $100 of insured value

Conclusion

Considering the unique challenges of operating prisons and jails, adequate insurance protections are crucial for managing risks inherent to the correctional facilities industry. The insurance policies discussed provide vital coverage tailored to the needs of correctional institutions and help protect organizations financially from unpredictable incidents.

Frequently Asked Questions

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