It will happen. If you spend any amount of time in the snow and ice management market, then sooner or later you’ll get that fateful letter in the mail advising you of the pending lawsuit (or a suit already filed). The letter will then advise that you have 30 days to respond, to please take this to your lawyer, or go to legal services if you do not have an attorney.
OK… wait for it. Here comes that sinking feeling right on cue: “Oh my God... what now?”
Well, it’s not the end of the world. You can survive this. You’re business will go on to fight snow for winters to come. However, you will be sunk unless you make some prudent, well-timed decisions throughout the process.
Some folks just send the paperwork through to the insurance company. They hope it will all go away and never actually think about it again. It’s what you pay your insurance premium for, right? It’s their problem, not yours. You were there. You did your job. It’s not your fault.
Wouldn’t it be nice if it was just that simple? However, it’s rarely that simple. At some point, you’ll have no choice but to actually defend yourself.
Let’s say you simply choose to ignore the claim and let the insurance company deal with it. That’s fine, but the chances are your insurance carrier will eventually drop you and you’ll be looking to do your business elsewhere. That is, if another carrier will have you.
So you want to take the proactive approach. Good choice. When the paperwork arrives there are some things you should be addressed immediately and other things that can go on the back burner for awhile. First, start a file to hold a record of pertinent documents and data. This feels basic and simple, but you’d be surprised how many contractors feel they can put this step off until later. Nothing could be further from the truth.
Start by gathering up whatever documentation you do have – records of activities on the date of the loss/accident. These include:
- Employee records
- Route sheets
- Weather data
- The contract
- Anything else in the customer file
Be warned: Don’t just take the items from the customer file and put them into this new file folder. Instead, take the time to copy your original records, documentation and customer files for your case file. And while you’re at it, make another copy for the insurance company.
Once your file is in order, author a clear and concise letter to your insurance agency (or broker) outlining your position. In the letter, ask that the adjuster assigned to your case reach out to you before going very far with the case. Be thorough, but don’t be judgmental. Remember, the insurance carrier is on your side, but they have the ultimate say about settling or fighting the lawsuit. Include all the pertinent documentation you have just gathered and copied for them. Also, this process should take, at the most, a few days, and certainly not weeks or months.
When you chat with the assigned adjuster refrain from making demands about them fighting it to the very end, meaning you want to take it to trial. Instead, funnel this energy into establishing a professional rapport with the adjuster. Remember, this person is on your side in a very big way, even though you may not believe it at the onset of your newfound relationship. Present your case in a concise and forthright fashion.
While the adjuster is on your side, this person does not work for you. They work for the insurance carrier. Most likely, the case will be assigned to a lawyer. This lawyer represents the insurance carrier, not you. You are the insurance carriers’ client, but the insurance carrier ultimately makes all the decisions. In fact, you gave the insurance carrier full authority in this scenario. Don’t believe me? It’s in the fine print most snow contractors never read.
The lawyer will likely contact you to discuss the case. Here again, you can explain your position and your side of the situation. Again, like with the adjuster, giving the attorney a hard time gains you nothing. Despite how frustrated you feel over the injustice thrust upon you, always conduct yourself in a professional manner.
Make sure the attorney has all the data you forwarded to the insurance agent or broker. The attorney will respond to the lawsuit in the necessary time frame. That’s his job. Once this series of events occurs, you will get a list of questions – or interrogatories – from the plaintiff’s attorney. Your attorney will assist in crafting the answers to these interrogatories. Your attorney will also craft a series of questions for the plaintiff to answer. These too are called interrogatories. These are exchanged between the parties over the course of several months. You may also get interrogatories from other defendants in the case.
Generally, the property manager, the property owner and others will be included in this exchange of information. Quite frankly, not much real information is exchanged in this process. Additionally, if either side thinks up some more questions after the first set of interrogatories has been exchanged, then “supplemental interrogatories” can ensue.
At this point the insurance company, the court and the attorneys are all involved and engaged. The next process in this time-tested schedule is called “discovery.” Here, the parties ask for documentation from both plaintiff and defense to support their position. The parties will ask for specific information from the other side. This is a frustrating and lengthy process. Neither side knows for certain what they seek, although most attorneys ask for standard stuff, including:
- Records and documents
- Medical records
- Equipment maintenance records
- Payroll records
At the conclusion of discovery, the next step is for depositions to be held. The lawyers schedule to question the involved parties about what happened, what was done to prevent what happened, what injuries were sustained, what preventative measures were taken to protect the injured party, etc. I’ve read depositions where the deposition took an hour and are 50 pages long. The longest one I have read (in a slip-and-fall case) took 8.5 hours and went 600+ pages. Of course, this is an extreme example, but it can happen. Here, the parties uncover specifics about the accident, what was witnessed, what was done and how it was accomplished. Defense counsel questions the plaintiff. Plaintiff counsel questions witnesses and the snow contractor, property manager and the owner of the property. Each party is given the opportunity to question each deponent.
Expert witnesses can be engaged to review all the pertinent data and provide their opinions as to whether or not appropriate actions were taken by the involved parties. These experts include medical experts, weather-data experts, snow and ice management experts, engineering experts and the like. These experts can also be deposed to further investigate how their opinions were determined.
Depositions are considered “testimony” given under oath. The same rules apply as if you were testifying in front of a jury. Lying will get you into considerable trouble. Perjury rules are in force. The questions are not constrained to information specific to the case. Lawyers are given wide latitude as to what questions can be asked. The answers to most of these questions can be brought up at trial, if a trial ensues. If the answers at trial differ from the answers given in deposition, the deposition can be produced to potentially impeach the trial testimony.
All of the above is done through a schedule which is set by the judge overseeing the disposition of the case. Deadlines are given as to when interrogatory investigation needs to be completed, how long discovery can go on, when expert witness reports must be submitted, and how long depositions can take to be completed.
Now come the settlement talks. Here, the opposing parties engage in negotiations to determine if a trial really needs to occur. This can go in one of many directions depending on jurisdiction and local/state laws. Sometimes, settlement talks are scheduled whereby all parties participate and decide just what “works” for all parties monetarily. Sometimes, the parties set a high-and-low amount. This means the parties agree to what the highest amount can be, and what the lowest amount of any settlement can be. Then, an arbitration panel holds hearings to allow both parties to present their case. The panel then determines the amount of any settlement. If the panel decides on an amount that falls below the low-settlement threshold – then the low number prevails. If the panel decides on an amount that exceeds the high-settlement threshold, then the payment has been “maxed” and the agreed upon high number prevails. And, of course, if the panel determines an amount that falls within the high/low range – that number is paid.
There are other ways a settlement can be achieved. These include straight arbitration, mediation, rock- scissors-paper… Just kidding on the rock-scissors-paper option. If no agreement is reached the lawsuit then gets scheduled for trial. In my experience, many such disagreements get scheduled for trial. However, very, very few actually go to trial. I have had it happen where I have made the trip to the city where the trial is to be held, and a settlement is reached hours before the trial commences. I’ve even had it happen that a settlement was reached on the second day of testimony. I in slip-and-fall cases, though, it is my experience that a trial rarely occurs.
More times than not, a snow contractor wants to “go the distance” and “fight until the bitter end.” Sometimes seeing a case through is just not cost effective for the insurance carrier. Given the relative expense of going to trial, often it is cheaper to settle than spend the money necessary to go to trial.
Several weeks of preparation on the part of the lawyer involved are usually necessary. These costs can run into the tens of thousands of dollars for the insurance carrier’s lawyer(s). The costs associated with having the expert witness’s come to trial can run into the tens of thousands. This includes all of the experts, and not just the snow management experts.
The snow contractor has to be there for the trial. That, too, costs money in lost time at the office. Sometimes these costs are so high that settling the case saves the insurance carrier tens or hundreds of thousands of dollars and becomes the smart financial decision, even though the snow contractor still wants to duke it out to prove their point that they are a good, viable and diligent service provider.
This entire process – start of the lawsuit to trial or settlement – takes years. It is a long, expensive and involved. Of course, the cheapest alternative, in the long run, is to provide solid service and properly document your site activities. Record keeping and diligence in documentation can often head all this off at the very beginning.
3 things... We learned this winter
Mills Insurance’s Matt Peterson reflects on the important lessons the professional snow and ice management industry learned from Winter 2012-13.
“Pretty deep stuff, Matt,” you might be saying. “It was just winter, right?”
Well, winter returned to many of the snow states -- and for some markets, they for better or for worse got a real good pummeling, especially in the second half of the season. So here’s a perspective from someone working on your behalf in the insurance industry and who closely tracks trends as they relate to the risks working hard to mitigate.
1. More insurance carriers are exiting the market of insuring snow removal companies.
It’s a fact. They would rather avoid the class all together if given the opportunity. We have tracked this very closely since 2009. Mills Insurance’s responsibility to the ASCA and the industry is to keep our finger on the pulse of everything insurance. This includes the reaction to snow removal slip-and-fall claims and changing trends in the industry. We are in a unique position to have access to a lot of information with respect to snow removal and facility maintenance contractors. At the start of the season there were a handful of carriers that would offer premiums a contractor’s insurance coverage, by Dec. 1 it was down to a small few. You will see more of this next season.
As the East Coast was first to take large increases in premium and restricted coverage, Mills Insurance tracked an overall insurance reaction past Illinois this winter. We found law suits to be less frequent and smaller judgments the further west you would go, but this had pushed further west this winter with states like Wisconsin contacting Mills Insurance complaining of unfair treatment from their old insurance carriers. This also includes being dropped outright for having one too many slip-and-fall claims.
For many snow contractors, the coverage is expected. This is a vital contract requirement for many snow removal contractors, but insurance carriers are finding ways to limit their liability with respect to the third party slip-and-fall claims. Endorsements -- primary non-contributory -- should be outlawed. This form gives away rights to subrogate against a negligent property owner. All too often a snow removal contractor calls in and asks for help. It turns out that they didn’t have the coverage they needed and it’s time to get paid by the contractor who hired them. However, they cannot provide the contractual obligation they signed on for, due to the additional insured language required in the snow agreement.
Matt Peterson, CRIS, is the owner of Mills Insurance, Tabernacle, N.J. He serves on the ASCA’s Industry Standards Committee and a frequent Snow Magazine contributor.
Snow Industry veteran John Allin is an author, consultant and educator, as well as a frequent contributor to Snow Magazine.