Snow Removal Insurance: Key Differences in Coverage
As you’ve probably heard—or have experienced firsthand—it’s increasingly difficult to buy snow removal insurance these days. An uptick in lawsuits, combined with unfair regulations, drive up the cost of snow plow insurance, by transferring the lion’s share of the exposure to snow and ice contractors. Many commercial carriers don’t want to write these policies. Those that do are charging hefty premiums.
But let’s say you’ve been able to secure snow removal insurance despite these hurdles. This must mean you’re fully covered and all clear for winter weather contracts, right?
Not so fast. Plowing insurance is not all the same. There are different ways to buy it, and different exclusions which—left unchecked—may create gaps in the coverage you think you have. Here’s a closer look:
Snow Removal Insurance Option 1: Adding a Class Code to Your CGL
For most mid-sized landscapers and contractors, snow plow insurance is secured via the CGL, or commercial general liability policy. Depending on the insurance carrier, it’s easy enough (albeit an added expense) to add “snow and ice management” as a class code to any existing class codes the company uses for its primary, in-season work. The benefit of buying snow plow insurance this way is that CGL policies with mainstream carriers are fairly standard. Most already include key endorsements for provisions like completed operations, additional insured, and waivers of subrogation. (More on what these provisions mean below.)
So, if you have snow plow insurance as a part of your general liability coverage, all you need to do is ask your agent if these specific boxes have been checked. In most cases, already they have. If they haven’t been checked, it’s vitally important that your agent make the adjustment. Adding the necessary endorsements adds a nominal charge to your premium, while correcting major gaps.
Snow Removal Insurance Option 2: Buying a Standalone Plowing Policy
Some snow and ice contractors are unable to add plowing coverage via the CGL—either because they don’t yet have a CGL or, more likely, because the company who writes their general liability is squeamish about plowing and will not allow it. In this case, contractors are forced to buy “standalone” policies, available through surplus lines (i.e. insurance for the high-risk work that mainstream carriers have rejected).
Standalone snow plow policies are a bit trickier to interpret and often rife with exclusions that you may not be expecting. For example, remember those provisions we mentioned above? With a standalone policy, it’s more likely these provisions are NOT already incorporated into coverage. Without them, here’s what you’re missing:
- Completed Operations
We all know commercial auto coverage is designed to protect you against third-party injuries or property damage in real-time. But what about after you’re done plowing? What if—five hours later—the snow mound you pushed against a wall begins to melt, and refreeze, and eventually causes someone to fall and break a hip? Without a Completed Operations endorsement (CG2292), you could be on the hook.
- Additional Insured
If your plowing work overlaps with that of another contractor, it’s often a good idea to add each other as “additional insureds” on your policies. This way, if either of you is ever found to be a fault in an injury or damage claim, this endorsement releases the other from any liability. What’s more, the client for whom you are plowing may require additional insured status, as part of your contract agreement. There are different ways to include additional insureds (via blanket endorsement or by scheduling them individually), and there are different editions (11/85, CG2037, CG2010) that may be more or less comprehensive, expensive, and/or difficult to procure. Without unpacking each edition in detail, suffice it to say you should ask your agent how this endorsement plays into your overall plan.
- Waiver of Subrogation
Subrogation is when an insurance company pursues the third-party who caused a loss to incur. Adding the waiver provision to your snow plow insurance policy is another way to boost your bid for plowing contracts. Clients want to know your insurance company won’t attempt to go after their policies in the event of a claim—even if they were at fault (e.g. a tree falls on one of your employees while he is shoveling your client’s sidewalk). Standard CGL policies make it easy to add this endorsement, whereas standalone snow coverage will require more careful tweaking.
Bottom line? Most folks with snow plow insurance baked into their CGL are probably on track—but it still makes sense to ask your agent. On the other hand, folks with standalone plowing coverage could be missing key provisions. If you’re in this camp, now is definitely a smart time to check in with your agent. And it’s also a good time to rethink your current CGL carrier. After all, you may be able to secure a more standardized and cost-effective form of snow plow insurance through a carrier that will do both.