The Insurance Snow Liability-scape

Features - Risk & Liability

July 23, 2018


Late last year, we saw a few insurance carriers try their poker hand at insuring the snow removal industry. There were some who would allow a landscaper to perform snow removal as long as the company in questions generates less than 15 percent of its total gross revenue. Consequently, we have had reports of snow contractors being coached by insurance agents to misrepresent their sales of snow removal operations.

Gross revenue for a particular operation such as snow and ice management is used as a measuring stick for pricing of the premium, limiting the amount of snow removal exposure is nothing new or unfamiliar for the insurance industry’s intention is to clearly limit any real exposure to slip and fall claims or frequent property damage claims. A proper and accurate exposure basis is mutually beneficial concept between insurance company and snow contractor. Common sense should prevail along with thoughts of “right vs. wrong” business practices. Within the world of workers compensation, insurance agents and the insured company buying the policy have faced insurance fraud charges for misclassification and untruthful reporting of exposure basis on polices. Just not a game that should be played and could be dangerous if proven in court.

At this point in the second quarter of 2018, the insurance market is cowering from an active snow season on the East Coast. We see even fewer carriers taking on new risks and offering insurance policies on the market devoted to snow and ice contracting companies in the 2018-19 season. Perhaps shrinking markets or options have felt the sting of unrealistic snow removal exposures basis in the past or can not stomach the industry.

Once the first major storm of the season hits, our program typically slows admitting new applicants into the population of policy holders. Many reasons motivate our office to be careful of who is offered a policy, but typically the snow companies who have not addressed insurance by the end of the fourth quarter should be reviewed carefully and with caution. Our program declined 70 percent of new applicants last year.

Any admitted carrier such as State Farm or Nationwide who offered snow removal or the 99310 General Liability R Class continued to avoid the class. These types of carriers are restricted in correcting any rate adjustments due to state regulations, so insurance product executives must be careful when considering writing new policy holders. Policy rates are important to the long-term stability of a program and premium dollars need to allow for adequate funding for any future claims. Before you cheer against insurance rates, keep in mind, though, that if no claims occur, perhaps the insurance world will not need to increase premiums.

As for the ASCA Snow Removal Insurance program, steady as she goes. Proper planning and strict underwriting from past years is paying off. The Snow Removal Insurance Brokerage program is pushing into its fifth year of funding adequately and boasts a strong loss ratio. While the program has paid its fair share of claims, the expected claims dollars out have trended lower.

Never build an insurance product with a goal to buy up accounts, I like to say. Funding for future losses and adhering to guidelines will allow long-term stability. Insurance principles dictate that you can’t maintain a line of business if it’s not funded sufficiently.