WARNING: You May Not Be Covered

Avoid insurance slip-ups with an off-season evaluation of your coverage

September 19, 2005

As the snow season approaches, many contractors may be operating without adequate insurance. Or worse, they may have unknowingly employed subcontractors lacking the appropriate coverage.

"It’s a problem no one wants to talk about," says Wayne Vitale, owner of Vitale Agency in Bellport, NY. "There are a lot of people running around on the knife’s edge about (whether they’re adequately covered). There are a lot of people crossing their fingers that nothing is going to happen. And when something does happen, it’s a nightmare – an expensive nightmare. And it all could have been avoided if they had taken care of this ahead of time."

With fewer insurance companies willing to underwrite winter plowing activities, snow contractors should use the preseason to build relationships with their carriers. Many larger U.S. insurance carriers, when questioned by GIE Media’s Snow Magazine, hesitated to admit they insure snow and ice removal activities. Some firms that underwrite snow operations declined either interview requests or to go on the record about this issue.

Still, much of the insurance covering snow and ice contractors is inadequate. Often, policies don’t cover off-season snow removal activities. And if a policy does permit it, the extent of snow removal is typically more than the insurance carrier will tolerate. It’s the snow and ice removal industry’s greatest problem, Vitale says, and plowing is the type of coverage most insurance companies now won’t touch with a 10-foot pole.

"Snow and ice removal is a high-hazard occupation because there’s lots of litigation," Vitale says. "It’s not a question of if you’ll get claims, but when and how many. And if you’re running snow operations in a large metropolitan area, well, then you’re probably getting sued on a regular basis."


Snow contractors who believe they are adequately covered for snow and ice removal operations must review their policies in the off-season and ensure their insurance carriers haven’t altered their snow and ice removal coverage. Changes may include limiting operations to certain types of snow and ice removal duties. For example, a policy may exclude plowing public streets.

And in some cases, insurance carriers drop snow and ice removal coverage altogether. Often, the snow contractor doesn’t realize this fact until it’s too late. Then, they are left to deal with the financial consequences.

Insurance Basics

Knowing key terms can help you navigate through the often confusing world of insurance. However, most experts suggest consulting your agent for more specific information on terms and coverage that apply to you.

Bodily Injury (BL) and Property Damage (PD) Liability Coverage: Provides coverage for unintentional loss caused by your vehicle to another person or property. Bodily injury means physical injury, sickness or disease sustained by a person. For example, BI loss would be a slip-and-fall claim. Physical damage means damage or destruction of tangible property. For example, sliding into a customer’s garage door would constitute PD loss.

Collision Coverage: Provides coverage for damage to your vehicle resulting from the impact with another vehicle or object, or the upset of your vehicle.

Comprehensive Coverage: Covers every type of physical damage loss to the vehicle except collision and may have limitations.

Property/Casualty Coverage: Protects physical property and equipment against loss from theft, fire or other perils; all-risk coverage covers against risks; named-peril coverage protects only against perils named in the policy.

Umbrella Coverage: Protects for payments in excess of existing coverage or for liabilities not covered in other policies.

"A lot of people are out there operating with coverage that just isn’t there," Vitale says. "And those who are (operating with full and adequate insurance coverage) are finding out that it’s becoming very, very expensive."

However, snow contractors can use full coverage to their advantage. During the preseason bidding process, snow contractors can educate property owners that many lower-bidding companies may not be adequately insured, and in the event of a slip-and-fall claim, the property owner may be liable. Property owners should demand snow contractors provide insurance certificates stating they can conduct snow removal and sand and salting services – many times known as "certificates for street cleaning," Vitale says.

"If they explain the issue and have the property owner demand a certificate of insurance and a policy that specifies for snow removal, salting and sanding, then the low-ball contractors can’t compete," Vitale says. "This thins the herd, so to speak, and the guys who can do the work float to the top. I’ve known (snow contractors) who actually were able to gain clients back because they’re properly insured."


While larger snow contractors typically can afford the expense of adequate insurance coverage, they’re still not shielded from risk and liability. Large snow and ice removal operations find themselves exposed to litigation if they use subcontractors who are not adequately covered.

When dealing with subcontractors, every snow contractor needs a written contract signed by both parties. That contract, Vitale says, must require the subcontractor to maintain the appropriate level of liability coverage and name the snow contractor as an additionally insured party in the event of a lawsuit. The subcontractor must also agree to hold the snow contractor harmless and indemnify and defend him in a liability suit.

Without these risk transfer mechanisms, Vitale says snow contractors set themselves up for a world of financial hurt.

"If you don’t have the proper paperwork in line, you can have claims held against you that you normally wouldn’t have to deal with," Vitale says. "What happens is the subcontractor’s insurance company will decline to defend the contractor and they’ll end up paying for his own defense."


Maintaining solid communication is a factor in strengthening the relationship between snow contractor and insurance agent, says an East Coast insurance insider. Snow contractors should review their coverage and needs once a year, preferably during the preseason months. If business circumstances have changed, the coverage should be adjusted.

In addition, insurance firms recommend snow contractors talk to their agents about new types of coverage and new rules governing the amount of liability coverage they need.

"Find an agent you are comfortable working with, who takes the time to answer all of your questions," says an insurance insider. "This will allow you to focus on your business knowing that you are adequately covered."