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Old 03-19-2011, 06:44 PM
superdog1 superdog1 is offline
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Insurance advice from an Agent

Hi!, My name is Tim and I am new to the lawn care business, but one thing I am NOT new too is insurance, as I was an Agent for almost 20 years in PA. Since I only know a little tiny bit about lawn care and being a LCO, I thought I would try and pay back a little for all the good things that I have learned here.

To start out with, you should know that I am only licensed in PA, so what I am about to tell you may, or may NOT, apply to you and your State or Country. With that being said, business insurance is really fairly generic, as most of the very first rules and reg's for it were written in the State of NY in the 1860's and everyone else just copied for the most part, as there is no need to re-invent the wheel.

The main question I always see being asked is "How much will insurance cost me for a basic policy?" That is a silly question, as there are so many variables, it is IMPOSSIBLE to give you an accurate answer. Most States base their liability rates on payroll. If you are a SP (sole proprietor)? they will use $5200 to come up with a rate. They do this even if you make $150,000 in a year. As a SP, they don't care how much you make because you will be the only one doing the work and since you own the CO, they doubt very highly you will do sloppy work, as your livelihood depends on the quality of your work.

That whole thing changes though if you have employees? If so, they will charge you the base of $5200 for yourself ($10,400 if a partnership) and then bill you for every nickel you pay out to your workers.

EXAMPLE: base payroll for yourself is $5200 a year. The following year, you pick up 1 worker and pay him/her $10,000 and give them a W2 for that amount so your total premium will be based on an amount of $15,200 for that year.

It is done this way because, lets face it?, most employees are just there for a paycheck. Most of them don't care if you are in business next year or not and will do some fairly sloppy work unless you are breathing down their neck. Employees cause almost 80% of all claims.

On the coverage side, you need at LEAST $1,000,000 of liability coverage to operate your business. Remember, this coverage is your first line of defense if something goes wrong, so don't think you are saving a few $$ by only getting maybe $300,000 of coverage. While some Agents/CO's won't tell you this, every insurance CO out there has what is called a "minimum premium". What that means is that whether you get $300,000 or $1 Million per occurrence? the price might be the same?

In other words, they will only give you what you ask for in some cases, so if you only specify $300,000, that may be all you'll get for $500 a year when in fact, you could $1 Million for the same price. Would you rather cut 1 lawn and get $500 or cut 3 lawns and get $500? The insurance CO's feel the same way.

There are 2 limits of liability on your policy. The "per occurrence" limit and the aggregate limit. The first one is what they will pay each time something happens. The second one is the total amount they will pay out in any given policy period. These limits are listed on your policy. If you get $ 1 Million per occurrence, and a $ 2 million aggregate, that SHOULD be enough coverage for the average LCO.

If you are working on yards that are attached to $2 million homes or doing a lot of commercial accounts?, you may want to reconsider and up your per occurrence limit to match your situation. Keep in mind that GL coverage does not cover plants dieing or others types of losses.

Most agents will also ask you if you want "Inland Marine? coverage for your tools. They may call it a tool "floater" etc. I don't have this because the cost is generally high and I am not worried about my gear being stolen. If you are in a high crime area, or all of your tools are bought and financed, then you may want to consider the cost of it, as you probably can't afford to buy new stuff is yours is stolen?

Here is a hint: There are 2 types of Inland marine coverage, scheduled and unscheduled. If it is available?, use the scheduled coverage, as it generally will cost you less. The reason scheduled is cheaper is because if it is listed specifically?, the insurance CO knows exactly what it has to replace and how much it will be. With unscheduled coverage, you could buy $20,000 in tool coverage and only have $5000 in gear. You could then buy the policy, wait a month or two and file a theft claim (bogus or otherwise) and then claim you had X amount of tools stolen that you never even owned.

It could really never be proven if you did or didn't and the CO would be out all that $$.When you buy your gear, you should have all your stuff listed on a piece of paper anyways (serial #'s and all), so why not take it in and save a few $$ ?

These are the 2 main types of coverage most of us will be concerned with. There are LOTS of other things included in some policies, as some CO's only sell what is called a "BOP" or Business Owners Policy. If this is the case, there will be coverage for everything including the kitchen sink. I am not saying you will never use some of these, but the chances are slim in most cases, so if you really want to save a $$ and still be covered, just tell your agent you want a "Monoline GL" policy.

One more VERY important item, pollution liability coverage. If you get into pesticides/herbicides and fertilizer, you are just plain NUTS if you do not buy it. In most cases it will not be included in your GL policy and if you are in a state that requires licensing to apply any chemicals, they will probably force you to get it before your license is issued.

IMHO, out of all the things we do as landscapers, the biggest potential claim area is the chemicals. One wrong move and all the exotic fish in their fancy pond will be dead or the neighbors kids start growing a 3rd arm and you will be in court. It could end up being the worst time of your life. On my policy, it was an extra $188 a year. That was $$ well spent!

This is really only the tip of the old iceberg so to speak. If you have any specific questions?, post them on here and I will try and answer them, Tim
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Old 03-19-2011, 06:48 PM
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Old 03-19-2011, 07:39 PM
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Nicely done, Tim Greatly appreciated.This info will come in handy.

I'm not a tree service but what might I also need to know, if I trim trees?
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Old 03-19-2011, 08:03 PM
superdog1 superdog1 is offline
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Quote:
Originally Posted by rob7233 View Post
Nicely done, Tim Greatly appreciated.This info will come in handy.
Thanks! I am trying to help as much as I can.

Quote:
Originally Posted by rob7233 View Post
I'm not a tree service but what might I also need to know, if I trim trees?
Run Forest, run!!!, as fast as you can from the tree trimming business!!

Just kidding. I can tell you that if you decide to get into tree trimming, get ready for a HUGE bill! The losses from this type of work are just horrendous and the insurance CO's know this. As of maybe 2007, most CO's stopped offering coverage for it. The CO's that still do know the risks and charge accordingly. Be very careful, as in some cases, if your current CO doesn't offer coverage and they find out you are doing it and have a separate policy somewhere else, they may drop you. Even though the first CO says they will not pay for any losses from trees, a good lawyer could still drag their coverage into it and they know it.

Have a heart to heart talk with your current agent and explain what you want to do. I am sure he/she can give you the gory details, Lol
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Old 03-19-2011, 08:21 PM
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vencops vencops is offline
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Hey Ins. guy......a Q.....

How many LCO's do you think are out there....that are insured (gen. liab.) for mowing, ONLY....that are NOT insured for other services they're performing? Give a percentage.

My guess is it's REALLY high.
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Old 03-19-2011, 08:34 PM
superdog1 superdog1 is offline
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Quote:
Originally Posted by vencops View Post
Hey Ins. guy......a Q.....

How many LCO's do you think are out there....that are insured (gen. liab.) for mowing, ONLY....that are NOT insured for other services they're performing? Give a percentage.

My guess is it's REALLY high.
Believe it or not, most GL (General Liability) policies cover almost anything a landscaper does. The 2 main exceptions are snow plowing and pesticide/herbicide applications. Those types of work have a separate GL class code that are usually billed a 1 time fee for each one. On my policy, as an example, the chemical coverage is a one time fee of $188 a year. You can bet your @$$ there are LOTS of guys spraying all kinds of weed killer without that coverage, so I would think your 80% is correct.

Second thought, it is probably 80% no insurance and no license to apply the chemicals in question!
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Old 03-19-2011, 09:28 PM
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SLMGT SLMGT is offline
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Good advice superdog1.
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Old 03-20-2011, 09:57 AM
fireman gus fireman gus is offline
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I greatly appreciate the information. I have a good agent but sometimes I feel he is only looking out for himself and not his clients. It's nice to have a LCO who knows insurance and willing to pass along information.
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Old 03-20-2011, 10:54 AM
superdog1 superdog1 is offline
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Originally Posted by fireman gus View Post
I greatly appreciate the information. I have a good agent but sometimes I feel he is only looking out for himself and not his clients.
Gus, I am getting out of the insurance business because I am tired of the stress, have 2 other ventures going on and landscaping fits in perfectly with the other 2 CO's I own and operate. It will give me some flexibility in my schedule which I desperately need to make 1 of those other business' grow.

With that being said, and since I am no longer an agent, I am going to bash your current guy! You said he is a good agent but yet you feel as though he is only out for himself? If this is correct? he ISN"T a good agent and he is doing you no favors.

Over the years, I wrote quite a bit of commercial insurance. I specialized in small contractors (mainly residential construction) and over the years, the word got out, as I not only knew the insurance side, but I also worked in the construction business for a few years when I was younger and did a lot of work to my own rental properties on the side.

One day I had a long term customer (personal lines) come in and tell me he was starting a landscaping business. As an agent, I obviously knew how to cut grass and trim a hedge and I grew up on a farm, so I had some experience with pesticides/herbicides and growing things, BUT, I never actually did any landscaping for a profit.

He started asking me a lot of questions that were specific to running an LCO and I didn't have the answer (at that moment), so instead of BS'ing the guy, I wrote all of them down, called my underwriter and chatted with her, and then went home and started reading everything I could find about landscaping on the good ole' interweb.

2 days later, I called the customer and gave him the answers he was looking for. As it turns out, he was also shopping for his coverage and had spoken to a few other agents. He asked these agents the same questions he asked me and they just blurted out an answer. As it turned out, the customer was no dummy and had also researched his questions after leaving my office.

The moral of this entire post is this: My price was $58 a year more than the others. He still went with me because I took the time to research and get the correct answer to the question. The other agents just spit out whatever they thought he wanted to hear on the spot just trying to get the sale.

If your current agent isn't doing this for you, or you just have a bad feeling that he/she is only out to make a sale, GET A NEW ONE! Now is the time to follow your gut instincts and act. The last thing you want is to have something bad happen, call the claims # and have the rep on the other end tell you "Gee, I am really sorry Gus, but you don't have coverage for this?"

If that happens? it is your word against his in court. Maybe you will win, and then again, maybe you won't? You want to be out doing work and making $$, NOT sitting in a court room fighting with your insurance CO/agent about a claim.
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Old 03-20-2011, 11:19 AM
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Thanks Tim! Great info!
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