Contractors – Why it’s important to have snow removal coverage if you are removing snow and ice

Winter is coming…

Well, actually it’s here and in full swing. If you live in the Northeast, or almost anywhere in the continental US, you’ve probably already experienced some snow fall.  This change in weather offers a great opportunity to contractors and landscaping companies who typically see less business in the winter months by creating the need for the service of snow removal. If you haven’t already looked into it, you’re a little behind the eight ball but there is still time to consider snow removal insurance if you plan on removing snow and ice this year.  Don’t get left out in the cold by thinking you have coverage when you really don’t.

Up and down the east coast anyone with a plow on their truck sees dollar signs every time the weather man predicts a snow storm in their area. Most contractors’ businesses slow down during the winter time so using snow removal as a way to keep their staff employed and make some extra money seems like a no-brainer. So, if you’re a contractor with a fleet of trucks in place, all that stands in your way of all that sweet, sweet cash are some plows and shovels…oh, and the proper insurance coverage. A common misconception that many contractors and people with plows on their vehicles believe is that their snow removal operations will be covered under their general liability policies. They are under the impression that god forbid there is a slip and fall injury, and trust me there are bound to be a few, their GL policy will step in and pay out the claim.  The fact of the matter is that it is becoming less and less common that insurance policies covering your day to day business operations will also cover your snow removal exposures, and it all starts with a lack of communication, or knowledge, from the insurance agent or broker.  Some carriers will still allow you to endorse your snow removal operation on to the existing GL policy, but most carriers exclude that exposure and require you to get a stand-alone policy to cover yourself.

Here are some Tips if you plan on adding snow removal to your service repertoire this season:

  1. Call your broker.  Let your broker know that you want to add snow removal to your daily operations, and see what exclusions and limitations exist on your current business liability policy. If your policy doesn’t have a snow removal exclusion, you’re good to go. If there is an exclusion, your broker will then be able to obtain the proper coverage for you rather quickly.
  2. Make sure it makes sense financially. Snow removal policies can be costly depending on your scope of work. The policies are also usually 100% earned, meaning they must be paid in full upon binding and, even if you cancel the policy, there is no return premium. If you have no snow removal contracts in place or it doesn’t snow heavily this year, a $5,000 policy may not be the best decision financially.
  3. Make sure your snow removal policy is written on an occurrence basis and not on a claims-made basis. A claims-made policy may be cheaper in the short term but if you decide plowing isn’t for you, you will need a tail policy to cover you for claims that come up from prior years, and that can be more costly than purchasing an occurrence based policy in the long run.
  4. Review your current policy. If you do have a contract to plow residential or commercial spaces, make sure you review it thoroughly to check for the insurance requirements as well as the language of the contract. It is always a good idea to ask you agent or broker to clarify any requirements that you may not clearly understand as there are sometimes when they can be using contractual wording that requires you to have specific types of liability coverage that you may need to make sure you address in the policy you purchase such as labor law coverage. Again, snow removal can be a costly policy and if they require high limits of insurance you may be required to have an umbrella policy in addition to the liability policy.

 

If you have any questions about your snow removal options or if you are interested in obtaining coverage in order to remove snow, please don’t hesitate to give us a call. We are always more than happy to help in any way we can.

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