Oct. 1 2004 12:00 AM
We live in an age where people sue fast food restaurants because their food “made” them obese, or their coffee was too hot. Tobacco companies are legally attacked by people who willingly smoked their cigarettes, despite the warnings on the package. It’s pretty obvious that anyone who runs any business had better watch their back, and have a good insurance plan to help. Insurance has become more expensive in nearly every avenue of life, in part due to multiple frivolous claims that have simply become the norm today. If you are considering adding snow removal to your service portfolio, insurance must be one of the first things you investigate. In a line of business that is naturally hazardous, you don’t want to fall down that slippery slope – literally.

This is an extremely important matter to attend to before shoveling a single pound of snow. It sounds simple enough, yet many contractors have managed to get themselves in trouble by thinking that they didn’t need it. Experts in the field cannot stress this enough: make sure that you are properly insured for the business of snow removal, or else you are putting your entire business, and perhaps even your personal assets, on the line.

You may be fully insured in your landscaping business, but that does not mean that you’re covered for the snow removal business.

“Contractors must be properly insured and yes, it is the number one expense,” says Tammy Higham, executive director for the Snow and Ice Management Association (SIMA), Erie, Pennsylvania. “Unfortunately, it is getting harder and harder to get insurance for this line of business, and many contractors find that the premiums are doubling and tripling. Some insurance companies are even dropping clients completely.”

“The smaller you are, the harder it is to get insurance,” says Jerry Schill, owner of Schill Landscaping and Lawn Care Services, Sheffield, Ohio. “Premiums are through the roof right now; it is absolutely absurd what I’m paying. But I sure as heck wouldn’t work without it.”

The insurance companies know the hard truth about snow removal--accidents and injuries are likely. Icy and wet conditions make it easy for workers to slip and fall, and in the era of sue-happy people, the slightest mistake made while moving snow can result in devastating lawsuits.

Sam Rolph, an agent with American Family Insurance in Oak Forest, Illinois, helps many contractors get insurance for the snow removal business, and he knows first-hand the consequences of trying to sidestep the premiums.

“When you can least afford the insurance is when you need it the most,” Rolph says. “If you are sued in a civil suit as a result of a work-related occurrence, filing bankruptcy will not protect you from the final settlement. If you can’t afford the insurance, don’t go into the business. You won’t have a means to protect yourself from frivolous lawsuits, and you won’t have the resources to protect yourself.”

According to Rolph, insurance laws vary from region to region, and the only way to know the particulars is to have a heart-to-heart talk with your insurance agent. Outline what you plan to do with the business; don’t expect to be able to come to the agent after an incident to get the insurance you should have had to begin with. There is a simple word for that: fraud.

“If you want to get coverage and backdate the coverage to cover assets that might be endangered because of a claim that was omitted, it isn’t going to happen,” warns Rolph. “That is fraud in every sense of the word. If I allowed it, I would be out of a job and we would be going to court. This is the way it is across the board in the U.S.”

Sometimes, it’s the nightmares that best illustrate the point. As mentioned before, this is the era of litigiousity, and the most innocent of mistakes can prove to be the most devastating of lawsuits.

“I had this one contractor who swore up and down that he didn’t need the general liability coverage. During one job his company did for a warehouse, the snow was accidentally pushed too much along the curb, covering up a fire hydrant. Later that day, an accident occurred at the warehouse, and when the firemen showed up, they couldn’t locate the hydrant,” says Rolph. “The facility burned down; their insurance company sued, and won. If the contractor had the general liability, he would have been protected.”

Sounds freakishly unreal, doesn’t it? But what about something even more innocent, like pushing snow into a mound for kids to play on? Rolph continues, “A couple of kids were playing on a hill that was created by the contractor. A kid fell off the mound and ended up dislocating his shoulder. You can guess the rest: his parents sued the contractor and won, making him pay the child’s medical bills, rehabilitation, and suffering. It was another instance where general liability coverage would have successfully protected the contractor.”

So how much should you insure? Rolph recommends that contractors make sure that the minimum coverage is $1 million/$2 million--which equates to $1 million per occurrence, and $2 million per policy year. But, having an umbrella policy helps many contractors sleep better at night.

“A senior citizen went to church, and got out of her car in the parking lot that a contractor had plowed and salted that morning. She lost her balance, slipped and fell in the lot and hit her head. The concussion was so severe it caused hemorrhaging. She survived, and the claim has yet to be settled,” said Rolph. “The insured has a $500 million umbrella, and it has allowed him to sleep better at night. You can expect to pay $50 to $150 thousand in attorney fees alone, not including the final settlement. The $500 million umbrella policy starts to look really good.”

Even with insurance, it’s important to take steps to protect your company. Contractors recommend that you be diligent in the details you keep for each job. “Paperwork, paperwork, paperwork. It has saved us repeatedly,” says Schill. “Slip fall accidents are at an all-time high; people are just looking to get rich. We document everything: any call backs, how much we salted, how much snow was moved, where it was moved, how cold it was, what time the work started, what time the work was completed. Write down and document anything and everything involving your job.”

The point of all this is to have written, documented proof that you did the job you were hired to do. If you plow and salt the parking lot of a movie theatre, and someone slips and falls, you can prove that you did all you could to prevent that fall, precluding you from being held responsible. “If something happens, it won’t be enough to just go out and say, ‘Yeah, we plowed and salted.’ The courts want written proof,” advises Schill. “By documenting everything you do, you are able to prove you made a reasonable attempt to keep things safe. This is a high-risk business, and you are exposed.”

Be safe, be smart, be covered.