Exposed!: Insurance Must-Haves

Heading into policy renewal, now is the time to rake through your coverage with an experienced agent.

You’re in a competitive bidding process to win a profitable account — one you really want to add to the roster.

It’s a condo association, and the property manager asks to review your company’s insurance policy. He’s looking for a waiver of subrogation and a specific limit to protect the association, just in case. But the fine print indicates the policy falls short.

“You can always add on to your insurance, but by the time you do that, you might lose the bid,” says Bill King, director of underwriting at Progressive Insurance.

This scenario is more common than business owners realize.

Another common misstep: figuring your operation is just too small for insurance, a misperception King sometimes finds with startups, part-time landscapers and small, home-based operations. “We hear it a lot from companies and owners when they reach out for insurance and we ask, ‘Why weren’t you covered?’ Often, the thought process is, ‘I thought I was too small to really need an insurance policy,’” he says.

“In today’s environment, no business is too small when an accident happens,” King says. “You will be held just as responsible as any other business owner, whether or not you have insurance.”

And operating without insurance for any period of time could hike up the cost of your policy since insurers look at the lack of protection as a risk. “Was there an accident that happened that the insurance company would be on the hook for covering — something that happened prior to the company being insured?” King says.

Another insurance blunder: figuring your personal auto coverage is just fine for a truck you use to haul mowing equipment to jobs. After all, you drive the vehicle to the grocery store and soccer games — and to maintain neighbors’ lawns. But when a fender-bender occurs on the way to an account, the insurance coverage in place doesn’t cut it.

“Small companies that are just starting out might use a homeowners’ policy or auto policy that they buy online,” says Drew Garcia, vice president of the landscape group at Rancho Mesa Insurance Services based in Santee, Calif. “They enter in their vehicle and mileage and trust the insurer without doing their due diligence.”

An insurer that understands the landscape industry and its exposures is a valuable partner to any size company. “There’s so much more that goes into an insurance quote than cost,” Garcia says. “It comes down to industry knowledge and the resources an agency can provide to the landscape company to help it better manage risk.”

Here are some important factors to account for as you plan for renewal to be sure your business is covered for the way you operate today and how you’ll evolve in the coming policy year.

Photo © Noel | Adobe Stock

Covering Your Bases

The size, scope, complexity and service mix of your business will dictate what type of insurance coverage you need. Location also matters.

“Is the business out of your home, or will you need a business owners policy that combines property and general liability into one package, making it more appropriate if you own a location or have business personal property you want to insure?” King says.

Landscape companies that focus on maintenance alone will require different coverage than a design/build firm with a fleet of heavy equipment. And lawn care companies applying products to properties need coverage for risks associated with chemicals. “They can be considered pollutants, so the landscapers should be sure it is included in a policy,” King says. Some insurers bundle this into a basic landscaper’s policy while others include it as a rider to a base policy.

Design/build companies should ask about installation endorsement coverage, King adds. “And you might want to consider professional liability because of the design aspect of major projects,” he says.

Contractor equipment is important coverage. “Make sure the limit you have on your contractor equipment coverage is appropriate,” King says. Also, think about non-owned tools if you rent equipment. If you rent more than once per year, including the coverage in your policy is more cost effective than buying a temporary policy from the rental company.

“It’s about the value you get, and you also get the safety of a policy without having to pay an additional expense at the time of rental,” he says.

Keep in mind, some general liability policies exclude new residential construction, Garcia says. “So, they do not want to insure you if you are doing new installs for housing developments with single-family homes, apartments, townhomes or anything in the track building realm,” he says, citing the reason: construction deed back claims.

Two coverages that might not come to mind immediately because they’re not field-related are cyber protection and employee practices liability. “If you collect customers’ information electronically or accept electronic payments, this coverage will protect you from data compromises, computer attacks and cover expenses related to identity recovery, and some states require owners to help in recovery efforts if a cyber incident occurs,” King says.

Employee practices liability protects businesses against employment-related claims brought forth by staff, independent contractors or job applicants.

Landscapers should make sure the limit on their contractor equipment coverage is appropriate.
Photo © Hoda Bogdan | Adobe Stock

Safety First

Workers’ compensation coverage is a must for landscape businesses of any size. Beyond buying the coverage, owners should evaluate the resources insurers offer to help mitigate risk. “Some agencies and agents have safety training or risk management platforms so the company can continue to build its safety programs and be more appealing in the insurance marketplace,” Garcia says.

Companies with well-defined safety protocols and training programs could access better pricing and coverage terms. You have to communicate how you mitigate risk with the insurer, Garcia says.

“If you’re doing something to keep accidents from occurring, make sure the insurer has that information so they can fully evaluate your business and come up with the right numbers,” he says. “An underwriter can connect the dots and say, ‘They have a great safety program and no larger workers’ compensation issues, so what they are doing is working,’” Garcia says. “This helps during an evaluation of your business so the insurer can come up with the right premiums.”

One number insurers analyze is your company’s Experience Modification Factor, which represents your claims history and is the ratio of your company’s actual workers’ compensation claims compared to expected costs for companies of a similar size in the industry. Basically, experience mod benchmarks where your claims stand versus similar businesses to determine if you are more or less of a risk to the insurer. Less risk can mean lower workers’ compensation premiums.

Not all states factor experience mod into the underwriting process, Garcia says. “Other states do provide a discretionary credit based on their judgment and analysis of the business that can impact pricing,” he says.

Workers’ compensation coverage also depends on the type of exposures employees experience on the job. “There are variants to landscape maintenance and design/build,” Garcia says. In other words, an increased likelihood of severe injury on landscape construction jobs is factored into the underwriting process and premium costs.

Overall, workers’ compensation protects your business if employees are injured on the job. “In the environment we are in today and with the physical demands on landscape contractors, we highly encourage a policy, and some states require it,” King says.

Ask the Expert

Your clients partner with you to maintain their properties and build outdoor living spaces. And, as a landscape professional, you need business resources to protect your people, customers’ properties, equipment investment and beyond.

“Surrounding yourself with a strong team who will help your business succeed includes partnering with an insurer,” Garcia says. “An agent with experience in the industry is looking at the fine print every day.”

Be wary of insurers offering stripped-down policies. “In today’s environment, make sure that you are working with an insurance company that offers a comprehensive product that protects them with the right price — because price is important for small business,” King says.

A solution: bundled policies. For instance, some companies offer a Select Package for landscape contractors that packages coverages like general liability, business operations, protection for tools and equipment, non-owned tools and so on.

Give yourself plenty of time to review your existing policy before renewal. While 30 days is generally sufficient, Garcia tells clients that allowing for 120 days is ideal.

And be sure you can easily access the insurer. “Business changes all the time,” King says. “So, if you are growing and adding different services to your offering, you want to be sure your insurance company can add on coverages.”

The author is a contributing editor with Lawn & Landscape magazine.

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