Business insurance is a requirement to operations, and as such every business owner seeks out an insurance policy to protect stakeholders in the business. As a standard part of business practices, once the insurance policy is in place, it may be lost in the daily shuffle to review policy coverage, other than on an annual basis.
Consider reviewing your insurance coverage at least semi-annually with your insurance provider. Business needs may have changed, or services expanded. Your equipment fleet might have grown or changed in its makeup. Further, requirements specific to location, customer profile, or current events can all have an impact on making sure your business has sufficient coverage.
As Turf reported in Fall 2020 through an interview with Scott Young, director of small business underwriting at Progressive Insurance, there are several endorsements that are sometimes overlooked but should be considered, depending on your specific operations.
“For instance, if you apply pesticides and/or herbicides, make sure your policy provides liability coverage,” said Young. “If you remove snow during the winter, you’ll want to make sure you’re adequately covered on your general liability policy. For landscaping businesses with employees, we recommend a business owner strongly consider Employment Practices Liability (EPL) coverage, which provides coverage if the owners of the business are sued by an employee for wrongful termination or hiring, harassment, and other employment related issues.”
In terms of limits, Young advised that a business owner should contemplate buying the “at least $1 million per occurrence limit” for both General Liability and Auto to ensure you are properly covered in case of a claim.
Third-party risk is a significant concern for lawn care and landscape businesses. In his March 21, 2021 online article, “Contractual Risk Transfer: Potential Risks & How To Minimize For Your Landscaping Business,” NIP Group’s Michael Finati, writes: “Third-party risk is the potential threat posed against your business by an individual or organization involved in a financial transaction without being one of the principals. In this case, third-party risks are risks generated by the clients you provide services for.”
Finati is program manager for the LandPro program at NIP Group, a specialty insurance company that designs commercial insurance solutions and risk services for more than 25 niche industries, including landscaping. In the article noted above, Finati describes potential third-party risks: “Clients may exhibit dissatisfaction with your work. Clients may claim property damage incurred from you or your employees, or clients may claim personal injury related to services rendered or negligence stemming from work completed.”
In his article, Finati outlines several areas where risk may arise. Consider if your current insurance coverage addresses these possible situations. He points to three scenarios: client dissatisfaction with work; property damage; and their personal injury (e.g., homeowner enters an area of property where chemicals have been applied, before it’s safe to do so).
As you think about these and other third-party risks, it’s helpful to review your client list and any specific notes your crews have made about these properties. These notes may bring to light any risks being overlooked currently.
As NIP Group’s Finati points out in his article, preventing or minimizing third-party risks is the most effective way to avoid liability. While risk cannot be eliminated, he offers several areas for landscaping company owners to focus in daily and long-term operations: contracts; equipment; client communication; and employee training.
“Clear, descriptive contracts” is how he describes it, following up with: “One of the most effective ways to minimize a client’s dissatisfaction with the work and services provided is to create and agree to a clear, descriptive contract before any work initiates. While verbal agreements are friendly, it’s best to have a written agreement in place to protect both parties involved. (See Finati’s article at www.NIPGroup.com for the rest of his insights.)
He also highlights: “Keeping track of equipment. To minimize personal injury related to equipment accidentally left on a job site, it is critical to keep a watchful eye on all equipment and hand tools when you or your employees are working.” Next, “Communication with clients. Keeping open lines of communication will significantly help to reduce third-party risks.”
Finally, look at employee training and how it relates to third-party risks. “Lastly, making sure your employees are adequately trained on basic company protocols, the risks mentioned above, and ways to minimize incidents will help significantly reduce potential liability. Training can be in person or completed online,” writes Finati.
Cyber Insurance: The Next Frontier?
Technology in the lawn care and landscaping industry is full throttle when it comes to equipment, software, and communication. Owners and crews are finding ways to use technology that can lead to increased efficiency, safety, and profitability. On the other side of the coin are cyber threats. Broadly, cyber security is becoming more prominent, and for lawn care and landscaping businesses, the cyber threat also applies.
As such, cyber insurance offers coverages to protect small business from a variety of cyber-related threats and legal liabilities. What does it cover? As Progressive Commercial, a leading business insurance company, describes: “Cyber insurance includes first-party and third-party coverages. First-party coverage offers protection if there’s an attack on the data your business owns. This coverage often applies to costs for investigative and legal resources. Third-party coverage offers defense and settlement costs if your customers or partners sue for damages that result from a cyber incident you’re liable for.”
First-party coverage options, as featured on the Progressive Commercial website, “might include protection for: data; computer attacks; and can cover ransom payments and professional aid during an extortion threat to your computer system, data or website. Also, first-party coverage can be for business; data; and identity recovery.”
Meanwhile, “third-party coverage options might include protection for: data compromise liability; network security and privacy liability; and media liability.”
Progressive also points out: “The amount of cyber coverage needed depends on your exposure to cyber risks and contracts requiring certain coverage limits. You might be considered high-risk if you store records on an unsecure network or your electronic devices are vulnerable to theft. Additionally, certain franchises or partners might require you carry higher coverage limits of $1 million or more.”
According to NIP Group: “Cyber liability covers exposures when communicating or conducting business online. Potential liabilities include the internet and e-mail. Online communication tools could result in claims alleging breaches of privacy rights, infringement or misappropriation of intellectual property, employment discrimination, violations of obscenity laws, the spreading of computer viruses, and defamation.
Example: Your landscaping company launches a new website to highlight the services you offer for customers in your area, book appointments, and make payments. Within a few weeks, you discover that your website has been hacked and your business is now being extorted to pay money in order to release the website. A cyber liability policy would cover lost income due to business interruption, extortion, data loss, and more.”
COVID-19: Impact On Insurance?
The green industry was deemed to provide essential services in 2020 when the COVID-19 pandemic struck the U.S. But did it impact insurance for businesses in the industry?
In Fall 2020, Turf asked Young at Progressive his view at the time: “While liability claims involving COVID-19 appear to be unlikely, many policies do have a Communicable Disease Exclusion that removes any potential coverage,” Young said. “Contractors will need to continue to take extra precautions when working with customers, including following CDC guidelines and appropriate usage of PPE. If you have employees, strongly consider getting an Employment Practices Liability (EPL) policy. EPL has become a hot coverage in 2020, and it looks like that will continue into 2021. The decisions regarding layoffs, furloughs, hours, and benefits reduction, and FMLA can all lead to a potential EPL claim for a small business owner.”
As a significant piece of a lawn care and landscape business, insurance policies should be revisited more than once each year. From traditional liabilities, emerging issues, and risks that don’t give much warning (such as the pandemic), it’s important to make time to evaluate potential risks and then discuss with your insurance firm.
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