No Longer Auto-matic

Come renewal time, you need to understand what vehicles are defined as “autos” and what are not.

© Christian Delbert

Insurance costs for commercial auto are increasing and the line of business has been labeled the new problem child amongst insurance professionals. The swing has been steadily trending higher for the last few years, but 2019 auto premiums are reaching snow and ice management contractors more directly.

The rise has creeped anywhere from 6 percent to 20 percent in auto premiums depending on the state, class, weight, size of fleet and a few other considerations, including claims.

The insurance world defines an auto as a motor vehicle, trailer or semitrailer designed for travel on public roads, including any attached machinery or equipment; or any other land vehicle that is subject to compulsory or financial responsibility law or other motor vehicle insurance where it is licensed or principally garaged.

A definition of an auto will not include mobile equipment, which includes equipment designed primarily for snow removal. I’m not making up the rules here. ATV’s used for plowing should be an auto according to the current definition. Most small endorsements I have seen don’t cover the real exposure. It’s a red flag if you are only paying $100 for your insurance on specialized equipment.

Basic coverage from an auto policy includes liability, uninsured motorist, med pay, comp and collision. These coverage principals are associated with those defined autos. Many contractors in the snow world tag equipment as the law requires; once wheels go over a public road leaving the owned premises.

According to the insurance world, any equipment designed principally for snow removal should be considered an auto. Equipment such as front-end loaders are using attachments for snow removal but are not generally designed for snow as the only operations, therefore staying as mobile equipment.

Pay attention to equipment primarily designed as a riding plow since, according to the definition of mobile equipment in an insurance policy, it’s an auto.

If the equipment can move by itself, or considered an auto or self-propelled, it’s an auto. Spraying equipment, building cleaning equipment, and even an amazing self-push snowplow or pushers could be placed in the auto category in most insurance carrier classifications. These modern items are very valuable and necessary with any shortage in the labor market and keeping up with lengthy sidewalks. Consideration of what is defined as an auto should be applied to coverage and affordability. I’m not trying to scare anyone from buying these types of amazing technological achievements, but it’s best to be well-informed.

Now, let’s apply the warning of increased insurance premiums associated to the commercial auto line of business. When budgeting for your snow company, be mindful of any increase in your company’s auto insurance policies, and the cost to tag all new and existing equipment that touches the road. Examine your equipment with both your equipment manager and the company’s insurance agent to determine what is an auto vs. what is mobile equipment. Don’t just send the updated equipment list come renewal time, really understand what is auto and what is not.

All snow contractors should have a general liability coverage that will trigger if a claim is filed for property damage and/or bodily injuries caused by a contractor's employees, equipment, or operations. There should be coverage for products/completed operations which is intended to pay for any claims arising out of the completed work (snow removal) by the snow contractor. There should most certainly be a commercial auto policy in good standing as well, if the claim falls under auto coverage.

Insurance carriers may address this loophole and potentially make some exceptions, however you as a well-educated policy holder should be clear on who is picking up the coverage come claim time … either a policy or self-insurance.

Matthew J. Peterson is president of Mills Insurance Group in Marlton, NJ. He's a frequent Snow Magazine contributor.

August 2019
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