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Has liability insurance ever saved your behind?

Discussion in 'General Industry Discussions' started by K.Carothers, Jan 25, 2006.

  1. rodfather

    rodfather LawnSite Fanatic
    Messages: 9,501

    We all know that liability insurance is for major claims...and I want to keep my home as well, thank you.
  2. TJLC

    TJLC LawnSite Bronze Member
    Messages: 1,308

    I agree 100%!!!
  3. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Messages: 2,116

    ++++I had a friend in the construction business whom just about lost everything he had because a sub-contractors employee was injured and the sub-contractor did no have any insurance++++

    My understanding of the insurance is that GL does not cover this. That has to be paid from a separate policy known as workers comp.

    ++++Without going into much detail, right now I'm facing a wrongful death lawsuit that arose out of an accident that one of my workers had on his way to work. Not my time, not my vehicle, I wasn't even there. My insurance company is picking up the tab++++

    First off, the prosecuting attorney is suing everyone in sight hoping that you have deep pockets and that somehow he can make a case against you. From what I just read above, this clown has no case against you at all. It wasn't your vehicle. I am guessing you would easily be able to hire an attorney to get you out of this for under $3,000. Everybody knows you can't sue Verizon if one of their employees crashes into you on their way to work. It would be quickly thrown out by the courts. If your employee was driving your truck home, that may be a different story. But you stated it wasn't your vehicle so I really don't think I would be so quick to say that GL is saving your butt on this. You are just being sued by a moron who has no case.

    DFW Area Landscaper
  4. AL Inc

    AL Inc LawnSite Bronze Member
    Messages: 1,209

    I see what you are saying, DFW. I really don't know what it would cost for me to hire the attorney to defend me through this process, which probably will be another year. Probably less than the premiums I have paid for the last 11 years. I know that I am the "deep pocket" and that they really don't have much against me. The point I was trying to make is that (at least with my company) with employees, there is a lot going on that is out of your control. I have two rigs going everyday, one of them easily could be involved in an accident, and I'm going to be prepared for that.
    You guys can talk all day long about how insurance is a scam, and I agree with you, but I doubt many of you would have the balls to run a business without it.
  5. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Messages: 2,116

    Everyone on LawnSite seems to be so hung up on General Liability. From my perspective, General Liability isn't at all where your real risks lie. In my opinion, your more likely to need the following insurances in the following order:

    1.) Auto insurance
    2.) Workers comp insurance
    3.) General liability insurance

    I would say, just off the top of my head, that I am 10 times more likely to need auto insurance than workers comp insurance and 10 times more likely to need workers comp insurance than GL.

    DFW Area Landscaper
  6. cpritch

    cpritch LawnSite Member
    Messages: 77

    My insurance agent didn't tell me that. I just finished printing 2,000 postcards/flyers with "INSURED" on them. :realmad:
  7. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Messages: 2,116

    Insurance companies face a tremendous number of costs that you would never incur without insurance. As clients of the insurance industry, we are the ones who ultimately pay those costs.

    For example, suppose you damage a customer's property. You are uninsured and you call around and find a competent contractor who is capable of repairing the damage. He will charge you $1,000.

    Now, suppose you want to go the insurance route on that same $1,000 repair.

    First, the insurance company has to incorporate in your state, they have to hire professionals to do that for them. They have to hire professionals to file paperwork with the state insurance regulatory body. They have to hire professionals to assess the risk associated with insuring various industries so they can figure how much they should charge. They have to hire expensive advertising firms to make TV, radio & print advertising for them. They have to have large advertising budgets and marketing budgets. They have to have large office buildings for all these workers. Being the nature of corporate america, they have to pay their CEO's & CFO's and BOD members ridiculous million $ salaries and then give them stock options on top of that. They have to have investors to get something of this magnitude off the ground in the first place. That requires another set of professional workers and an investor relations department. Of course, all these costs are spread out over thousands of clients, but these costs exist and the uninsured guy doesn't have to pay any of these costs.

    Then, when the damaged party finds out that there are deep pocketed insurance companies around, instead of allowing someone to simply fix the problem for $1,000, they suddenly have other damages. Now, the insurance company has to pay a lot of other costs in addition to the actual damages of $1,000.

    By the time you add it all up, I'd be willing to bet the clients of the insurance industry will pay $10,000 or more for that $1,000 worth of damage.

    There is a lot to be said for being uninsured. Rule number one in business law: you can't get blood out of a turnip. Our society will generally assume that the lawn guy is a turnip. When the turnip fixes what he broke, they will feel lucky and leave well enough alone.

    DFW Area Landscaper
  8. brucec32

    brucec32 LawnSite Platinum Member
    Messages: 4,403

    1. The biggest benefit most insured will ever see from a liability policy is the fact that the insurance company is obligated to defend you legally against all claims. More people go broke paying lawyers than from actual judgements. One flaw with the LLC/no insurance strategy some try is that a) you cannot legally represent a LLC unless you are a lawyer yourself in some states, so you'll have to default on any suit or spend thousands defending it. and b) you will still lose your case probably if at fault and they will take your business. The law doesn't always allow you to just play tricks like putting things in another's name to avoid liability. If "sam's lawncare" operates the truck, it might not matter that the truck is in Sam's wife's name. There's a doctrine in the law concerning that that I forget the name of.

    2. Do the math. For every $1,000,000 claim paid out they collect the $1500 or whatever premium from 667 individuals to break even. Then add in expenses of selling, running their business, etc, and I'm sure only one person out of thousands would ever need the insurance for a major matter. They have very smart, very nerdy people who figure out what the rates should be based on complex formulas (and educated guesses) about risks. One reason your rate might vary a lot from company to company is that one company's formula for your particular risk might vary from another's. It's not that one is just greedier than the other.

    3. It's not a "racket". They can't charge whatever they want and keep customers. The insurance biz is fiercely competitive. Insurers have problems staying in business too and have good times and bad. If they were really raking it in like some of the logic here has implied then my advice would be to sell your mowers and buy insurance company stock with it.

    Demand for insurance is not inelastic as long as there are many competitors selling it, which there seem to be.
  9. Daily Lawn/Landscape

    Daily Lawn/Landscape LawnSite Senior Member
    Messages: 695

    You don't need it if you can self insure yourself. I would rather spend $25000. and be on the safe side especially in todays suing society.:usflag:
  10. stumper1620

    stumper1620 LawnSite Bronze Member
    Messages: 1,889

    have to ask, Was this guy driving to work or was he meeting at a job site? If he was going straight to a job site the liability is mostly yours.
    Never allow employees to drive personal vehicles to job sites, have them meet at the shop clock in and travel in company vehicles. that way your liability starts at the time clock.

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