Why snow and ice insurance is such a challenge

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Ask Craig Lillis, president and owner of GroundsCare Landscape in Somerville, N.J., if it’s been easy for him to secure insurance coverage for the snow and ice removal portion of his business, and he’ll tell you it’s no walk in the park.

“We struggle just getting one option on the table,” he says. “We’re a good company. We don’t have a lot of claims. We do a lot of safety training. We focus on snow all year long. We do all the right things, and last year, I literally had one option.”

GroundsCare Landscape offers primarily commercial design/build, maintenance and irrigation services. Snow and ice removal is also a big portion of the business. Although his business does between $4 million to $6 million in snow services annually, liability is high in New Jersey, Lillis says.

“We’re paying premiums to the tune of $200,000 to $300,000, even if you can get policies,” he says.

Jared Perkoski, senior risk adviser with FBinsure in Taunton, Mass., says what Lillis faces is consistent with what he’s seen as an insurance agent.

“Over the past few years with litigation, there’s been a lot more liability that’s been pushed on to the snow contractors. Because of that liability, there’s going to be more claims because that liability continues to get pushed down to the person providing the service or their subcontractors,” he says, noting those increases in slip-and-fall claims drive insurance premiums higher.

How to avoid those high premiums

Perkoski says not all snow and ice service providers will face the issues of high premiums and little choice. It depends on how much of the business is in snow and ice. Some operations can roll snow and ice coverage into the policy for the rest of the business.

“If you have clean loss runs, and if you do not have a history of losses over an extended period of time, that’s going to be a check mark in the positive column for you if you’re trying to obtain insurance,” he says. “If 75 percent or 80 percent of your revenue is coming from your landscaping operations, that’s going to be another check mark.”

Another key factor is the type of properties the snow and ice management company serves. Big box stores or 24-hour drug stores might make it harder, but not impossible, he points out, because of the possibility of more risk and liability.

“If you’re just doing churches, hardware stores, business and office parks, you’re likely to get insurance coverage with your existing policy,” he says. “It’s when the majority of your revenue is derived from snow, you have a couple $100,000 claims sitting out there and then on top of that, maybe you’re doing those high-risk properties, you’ve got no shot at combining it into your landscape or other policy.”

From there, companies will need to look to the excess and surplus market for snow-specific policies, which could mean higher premiums for coverage.

Other things to consider

Perkoski says contractors need to think about ways to set their snow and ice service apart, such as implementing software to log service visits, tagged with GPS and tied to a weather service. Ensuring employees have Snow and Ice Management Association certifications also helps. Those steps show the insurance underwriter the operation seeks to reduce risk.

“Go out there, get educated, invest in technology, get your employees certified, all that stuff will help you in the long run,” he says.

It’s also important for owners to consider the expiration date for policies. Perkoski encourages contractors to work with an insurance agent to ensure renewals come at a time that doesn’t impact the snow and ice season.
“You don’t want to be hit with a renewal of insurance on Jan. 1 because you’re going to be halfway through your season,” he says.

Perkoski says a large policy jump mid-season could be costly and the contractor would be stuck absorbing that cost, unable to pass that cost on to customers.

“August is kind of like the last date we want to start doing this,” he says. “Usually, August is when the landscapers start to put in their snow and ice bids. June or July is kind of the sweet spot. They have a lot of receivables coming in from mowing lawns or doing excavation work, so they have a lot of positive cash flow at that point.”