This is certainly a common question I’m hearing from you in the industry. And yes, additional insured status will continue to be important. However, this opens up a Pandora’s box of complex questions.
In our industry’s history, it’s never been more important for a snow and ice management contractor to understand insurance obligations. And we are now watching property owners finally begin to pay attention to this topic as it relates to snow removal services.
Since many Snow Magazine’s readers are also ASCA-Certified members, I am going to assume you have a basic understanding of what the insurance term “additional insured” means. This exciting term can typically be found within a client contract under the section titled “Insurance.”
Or this may be a topic of discussion when purchasing your snow removal general liability policy from that brave and strong insurance agent who you should treat very well for attempting to protect your company from the many issues facing snow and ice management insurance.
The reason for adding a property owner as additional insured is typically because it is the responsible thing to do. If a snow and ice management contractor contributes to an accident, and that accident is funded or covered by an insurance policy, then it would be only reasonable for the service provider to fix anything that may have been damaged. The same can be said for the snow and ice management service it provides. Contractors want to be responsible and be accountable for their services, and not force everything onto the property owner regardless of fault – which would be wrong.
Typically, the additional insured intention will require that the accident be caused, in whole or in part, or partially caused by the snow and ice management contractor, with respect to potential bodily injury or property damage claims. Again, because ASCA members should know that general liability typically refers to bodily injury or property damage in its simplest form.
It is critical to note that indemnity agreements and additional insured are separate obligations. Indemnity agreements are not insurance. This becomes very important as the ASCA legislation initiatives start to become law, such as in Illinois. This can become a complicated topic. The indemnity obligation found in your client contracts should be “insured contracts” to the extent the indemnity agreement is permitted by law.
Defense obligations to your property manager/owner client’s byway of the indemnity agreements could be eliminated once indemnification for sole negligence is deemed against the public good. Defense dollars are really very important here. Those defense dollars can range typically at a minimum of $2,500, but realistically are on average between $7,000 and $15,000 to fight off a third-party slip-and-fall claim. At this time, with a duty to defend policy, a proper “insured contract” definition and the correct additional insured provisions, a legal indemnity agreement can trigger funding of each and every loss of the property owner, relating to snow and ice management.
Snow contractor would still protect a client through an insurance policy, if
- … its required by written contract;
- … if the snow contractor has contractual liability coverage on the CGL policy;
- … an additional insured endorsement covering property owner was purchased.
In my opinion, insurance should only contribute to the total loss proportionate to the snow contractor’s contributory involvement with that accident, or some relation to the activity or reason why it’s the snow contractor’s fault.”
The additional insured provision still requires that the liability be caused, in whole or in part, to the extent it was caused from operations of the snow and ice management contractor. Each state is different, as we all know, but courts tend to view additional insured provisions to be in favor of coverage for the one asking for it.
In my opinion, insurance should only contribute to the total loss proportionate to the snow contractor’s contributory involvement with that accident, or some relation to the activity or reason why it’s the snow and ice management contractor’s fault.
Snow contractors will still use traditional insurance tools to protect their clients from accidents that they caused. Insurance endorsements such as primary non-contributory, which spells out how insurance is excess in response to the same claim for a client, will still be important.
In short, yes, additional insured is still going to be very important. Even more in states where ASCA model legislation prevails.
It will continue to be very important for a snow and ice management contractor to educate its staff and its clients on the additional insured protections it may offer its clients, so long as an accident was in whole or in part the fault of our snow contractors.