By Robert Barresi
Have you noticed the number of qualified snow contractors dwindling as the years have progressed? Litigation has increased, insurance has become harder to get and overall regulation and contractual requirements have made it difficult for contractors to pass the vetting requirements of property managers, end users or third-party vendor qualification networks.
Perhaps you are experiencing the ongoing battle of procuring the appropriate insurance with the correct combination of endorsements that will qualify you as a vendor. The past seven or eight years have been a learning curve for most in the wake of Papadopoulos v. Target, when the Massachusetts Supreme Judicial Court abolished the long-standing distinction between “natural” and “unnatural” accumulations of snow and ice in slip-and-fall cases. Prior to the Papadopoulos decision, Massachusetts law held that a property owner was not liable for injuries caused by “natural” accumulations of snow or ice on the owner’s property.
As a result, hold harmless and indemnification provisions have become the means by which liability is transferred from the property owner to the contractor. In this way, the contractor is ultimately responsible for the maintenance and care of the parking lot, sidewalks and walkways. After several years of insurance carriers getting pummeled with lawsuits, the playing field has narrowed and fewer carriers are willing and able to offer the endorsements necessary to properly transfer liability and finance that risk.
How can this be?
My insurance certificate says $1 million per occurrence and $2 million aggregate just like the next guy? Why can’t I get paid? You might be missing what I’ve dubbed the “Snowplow Superfecta.” It’s that magical combination of endorsements that qualifies you to be a contractually compliant vendor.
These endorsements will not only qualify you as a potential snow plow vendor for customers, but also potentially insulate you from breach of contract in the event of a claim. It has become increasingly difficult to obtain these endorsements due to the litigious nature of snowplowing, the dwindling number of insurance carriers willing and able to offer them, and the costs to defend these claims. However, you can do your part by working with a specialist who understands the nuances of this contractual language and has a variety of insurance carrier access to properly structure an insurance portfolio that will provide you with the ability to win more work, reduce your total cost of risk, and increase profitability.
Insurance Endorsement Superfecta
Affordably being able to secure these endorsements can help qualify you as a snow services contractor:
1. Additional insured including completed operations
. There are many versions of the additional insured endorsement. The 11/85 edition is still the Holy Grail but typically difficult (impossible) for the average contractor to obtain. As a result we need to procure its “equivalent,” and we do so with a combination of the CG2010 and CG2037. Frequently, we’re seeing that the individual insurance carrier’s “Blanket Additional Insured” endorsement is not adequate, and it’s becoming necessary to schedule the parties with the appropriate additional insured endorsements. Some carriers can provide one (CG2010) but not the other (CG2037).
2. Primary/Noncontributory wording
. In the world of snowplowing, this endorsement has become a bargaining chip and one that some carriers may be unwilling to provide on general liability, business auto or both. This wording protects the financial resources (and insurance limits) of the property owner or general contractor from the contractor’s individual or joint negligence that causes injury or damage to a third party. Essentially, the buck stops with the snow contractor and in no way will the general contractor’s or owner’s policy pay for this claim in any capacity.
3. Waiver of subrogation
. This is a contractual provision in which the contractor limits the rights of his or her insurance carrier by stating that, in the event of a claim, his or her insurance carrier will not seek indemnification from an “at fault” party. If another party contributed in some way to a loss that your insurance carrier had to pay for, you’re waiving your right to recover funds from that party’s insurance carrier. This also applies in cases involving workers’ compensation. If your employee is injured as a result of an unsafe condition, whether you’re at fault or not, you are waiving your carrier’s rights to seek subrogation against the general liability policy belonging to the culpable party. Again, the buck stops with you.
4. CG2292 Snow Plow Completed Operations
. Here is where the rubber meets the road. The unendorsed general liability policy specifically excludes “Bodily Injury or Property Damage arising out of the ownership, maintenance, use or entrustment to others of any aircraft, auto or watercraft...This exclusion applies even if the claims against any insured allege negligence or other wrongdoing in the supervision, hiring, employment, training or monitoring of others by that insured...” Snowplowing is an operation of an auto, therefore it’s conceivable that your insurance carrier can/will deny coverage as a result of bodily injury that arises from your activities. The one surefire way to fill this gap, and the one surefire endorsement being required by most property managers and contractors, is the CG2292 endorsement that provides complete operations coverage for any auto used for snowplowing.
Additional insurance-related resources are available at www.sima.org/resource/insurance