By Bill King
From the August 2023 Issue
Landscape business owners have many considerations when it comes to purchasing insurance. They need policies that provide important coverages, but with the flexibility to meet specific business needs—all at a competitive price.
Of course, every business owner needs to reduce expenses and operate efficiently. However, it’s important to ensure you purchase the right type and amount of insurance coverage to adequately protect your business if the need arises. This will help reduce both your long-term expenses and potential shock to your bottom line should an accident occur.
There are many factors that impact your insurance premium, including the type of coverage and its respective limit. The following are five key considerations when determining your landscape business insurance coverage needs.
1. General Liability vs. Commercial Property Coverage
Many landscapers and other contractors purchase a general liability policy with limits of $1 million per occurrence and $2 million aggregate. This means that in any one instance, the policy will cover up to $1 million of damages, and for a whole policy term, the policy will cover up to $2 million of damages.
A business insurance policy is typically 12 months long. Most contractual obligations require landscapers to carry a general liability policy in the above amounts. General liability insurance typically provides coverage for bodily injury and property damage claims from the business’s operations, personal and advertising liability, and defense costs of a claim.
Do you operate your business out of your home? Then you do not need commercial property coverage if you have a homeowner’s policy already. At Progressive, as we designed the Business Owners Policy (BOP), we had such contractors in mind and offer policies with exclusively general liability coverage.
However, a Business Owners Policy could be right for you if your landscape business has a dedicated office or owns a property other than your home. This can cover your general liability needs as well as your business building and the business personal property located within the building.
It is important to ensure your limits cover the value of your building and business personal property. There is often a deductible for your commercial property coverage. A typical deductible for a contractor’s BOP is $500 or $1,000. However, many companies, including Progressive, offer higher deductibles that should result in a lower premium for your policy.
2. Protect Your Tools & Business
Many contractors, especially landscape pros, need to protect the expensive tools and equipment their business depends on. Landscapers can purchase blanket tools and equipment coverage, which is more convenient than scheduling each piece of equipment on the insurance policy.
It’s important to read your policy, since many insurers require individual pieces of equipment valued at more than a specified dollar amount to be individually scheduled. If you don’t schedule equipment above that specified amount, your coverage may be capped at an amount inadequate to cover your loss.
If your business temporarily rents equipment, then you should consider coverage for non-owned tools. This can cover tools rented for a short period of time and may be more cost-effective than purchasing the insurance ad hoc at the retailer.
Another consideration is to ensure you have coverage for your employee-owned tools if they use them in your business.
A commonly requested coverage endorsement for landscapers and other contractors is Waiver of Subrogation. This is often required for contractual agreements because it helps to minimize lawsuits between parties that are working together.
Another commonly requested endorsement is a blanket additional insured endorsement. This is a convenient way to extend coverage without having to individually name each party you work with throughout your policy term.
Primary and noncontributory endorsements are also commonly requested. This means your policy will respond first to claims arising out of your operations. Often the waiver of subrogation, blanket additional insured, and primary and noncontributory endorsements are required when entering contractual agreements.
Progressive offers a Business Select package that provides many different coverages at a more competitive price than purchasing each individually. It helps ensure business protection, but reduces overall costs. It provides blanket tools and equipment, waiver of subrogation, blanket additional Insured, employee tools, and more.
Yet another consideration for landscapers when purchasing insurance is the use of subcontractors. Many carriers require your subcontractors to carry insurance policies with limits at least equal to yours and require written agreements to be in place.
3. Understand Cost Influences
To help keep your costs reasonable, a landscape business owner should ensure they purchase insurance immediately when establishing their business. If a business operates without insurance, even for a short period of time, it could impact both the ability to find coverage as well as the cost of the policy. Why is this?
It’s due to one of the more complex aspects of insurance for landscapers: prior work could impact your current insurance policy, even if the work was completed before the policy was purchased. It’s one of the major reasons carriers focus on gaps in insurance, especially for contractors.
Other factors influencing price include the years of experience in the trade as well as any prior claims. Insurance carriers will typically ask about any business claims within the past three to five years.
The types of operations performed also factor into the insurance costs. Generally, the riskier the services provided, the higher the costs of insurance. Landscapers who only mow lawns will find their insurance costs will typically be lower than those who also install hardscape or do tree work.
The size of a landscape operation may also impact insurance costs. For contractors, payroll and number of employees is commonly used by insurance companies as an indicator of business size. Other factors include total sales or business income. These numbers are important for insurers to help understand how large an exposure exists for your specific business. For this reason, it’s important to list payroll updates since changes may impact the coverage provided.
4. Consider Tech Insurance
Cyber insurance is becoming increasingly important for all businesses, including landscapers. If your business takes payments via an app or credit card, or stores client information electronically, cyber insurance may be an important consideration. Unfortunately, cybercrime can interrupt your business, cause a leak of customer information, or hurt your reputation, among many other issues.
When there’s loss, landscape insurance claims can be particularly difficult to navigate for both adjusters and claimants. Read more…
At Progressive, we are seeing an increased number of landscapers using drones in their business for advertising purposes, to check on sprinkler system coverage, and other tasks. But what if the drone malfunctioned or fell, causing property damage such as breaking a glass table on a patio? A drone is considered aircraft, which many insurance policies exclude. (Progressive offers liability coverage for businesses using a drone in their operations.)
5. Determine What Works For You
To help reduce costs, landscape business owners should research discount programs at prospective insurance companies. Ask about discounts related to paying your policy in full or bundling your auto policies with your Commercial General Liability or Business Owners Policy.
As your company grows, expands, or even reduces services, there are many factors that can impact your insurance premium and coverage. Meet with your insurance agent and review your policy regularly to ensure you are properly covered and receiving the best rate from a company you trust.
King is the director of Underwriting for the commercial lines of Progressive Insurance. In business insurance for over 13 years, he is energized by providing insurance solutions for small and medium size businesses.
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