Here are two words that no contractor or insurance agent likes to hear together: slip and fall. This topic is addressed nonstop at industry events. There are seminars on how to prevent slip and falls, how to fight slip and falls, how to create contracts to not be held liable for slip and falls, and so on. Are slip and falls truly as significant an issue as everyone is making them out to be?
In the State of the Industry survey, 62% of participants surveyed reported no slip and fall claims and 30% reported one to three claims. This can be viewed two ways; and depending on whether you are a snow and ice management contractor or an insurance company, it can look very good or very bad.
From a snow and ice contractor’s perspective the aforementioned data looks very positive, with 92% reporting three or fewer claims. Snow and ice contractors may question why so many insurance carriers are refusing to write businesses in this industry or why insurance premiums are skyrocketing from those who do.
The other way to interpret the data is through the eyes of an insurance carrier, who sees that 38% of those surveyed had slip and fall claims in the last year. Add to that the potential six-figure cost of a claim and you have an insurance nightmare. The average cost of a slip and fall claim is roughly $15,000; however, claims can easily and quickly escalate to over hundreds of thousands of dollars if injuries are to the head, neck or back. From an insurance carrier’s perspective, they cannot justify charging a few thousand dollars in premiums when there is an almost 40% chance that a claim will occur that could easily be 10 times that amount. If a carrier is willing to offer a quote, you can bet that they will charge accordingly for the potential for a large claim.
Consider the following example. A few years ago, a contractor who was doing around $500,000 in snow and ice management sales was probably paying just a couple thousand dollars in premium. The snow and ice exposure was most likely added to an existing landscaping or excavating general liability policy. Then property managers started to push the slip and fall liability onto the contractor, greatly increasing their liability exposure. The company that was only paying a couple thousand dollars in premium had two slip and falls that totaled $50,000. Even if the contractor had been with the insurance company for 10 years, the insurance company is still $30,000 in the red.
As a snow and ice management contractor, the key to keeping the insurance you have or obtaining insurance at a reasonable rate will be to differentiate yourself. You and your insurance agent need to provide in-depth details to the insurance marketplace about your safety policies and procedures. It may also be helpful to share your subcontractor agreements and customer contracts. The old standard insurance submissions of loss runs, sales and payroll figures will no longer be enough. If this is the only information you and your agent are providing, you are doing yourself a disservice. You need to show the insurance marketplace that you are part of the 62% and not part of the 38%.
State of the Industry 2017
Jared Perkoski is a risk advisor for FB Insure. Contact him at 508-695-1441 or email firstname.lastname@example.org.
- 62% - Respondents who stated they had no slip and fall claims filed against their company last year. 30% noted they had 1-3 incidents.