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Insurance 101

Discussion in 'Introduce Yourself to the Community' started by superdog1, Dec 24, 2011.

  1. superdog1

    superdog1 Senior Member
    Messages: 255

    Since I became a member here, I have read quite a few posts discussing insurance. Some of the responses to the questions here have been correct, others no where even close. With that in mind, I thought I would try and give back to the forum and post a simple insurance "info" kind of thing. I have been an agent for almost 20 years and in that period of time, I have seen it all (I think?, LOl). It is important to note that I am only licensed in the state of PA, so you MUST check with your local agent to see if what I put up here applies to you?

    It may be helpful to know that the first state to adopt actual insurance laws and rules was NY. Since doing this is very time consuming, most states just adopted NY's rules and regs. This was much easier than re-inventing the wheel. I say this because what I am about to tell you should apply to almost every other state.

    Rule #1-If you have a personal auto policy that has your plow truck and the family car on it, OR, you could put the family car on it by calling your agent, YOU DO NOT HAVE COVERAGE FOR SNOW PLOWING!! Most personal lines auto policies are for vehicles that you drive to work and park, church on Sundays and to the grocery store. There will be a section in the policy that states any type of commercial venture or occupation will NOT be covered. Snow plowing, pizza delivery, or even using your truck as a carpenter with all your tools on it is not covered.

    Rule #2- Just because you have a commercial auto policy, it does NOT mean you have coverage for snow plowing! Some CO's need to add a special endorsement to the commercial auto policy for plowing to be covered. Some CO's will NOT give you the coverage on the commercial auto policy, as it is an endorsement on the General Liability policy, BUT, the same CO has to cover both policies in some cases for it to work.

    Rule #3- Lets say you know for a FACT that you have coverage? That's great, but just remember that you, and only you, have it. What I mean is this: If you own your pickup and you get sick?, you call your brother and ask him to cover your route, there is NO coverage for him, as commercial auto policies only cover listed drivers, so if your brother isn't listed as a driver on the policy declarations sheet?, THERE ISN'T ANY COVERAGE IF HE HAS AN ACCIDENT!!!!!! (There is a slight chance that the CO may cover it in some cases?, but they will also pay it and then drop you on the spot!)

    Rule #4- If you have subs working for you, make DARN sure they have the correct coverage BEFORE they pull onto a lot that you have a contract on and drop their plow, better yet, make sure they have it before they even leave their shop to drive to your lot to clean it. I say this because if they hit someone on the way to the lot, your butt is on the line!. You may ask, "How can that be??" Well, in most states, the "proximate" cause of the accident is where the responsibility lies. The lawyers will say that if you hadn't hired this person to do your lot, there would not have been an accident, as he would have never been in/at that particular place and time, so the accident wouldn't have happened. Sounds kinda' crazy, but this is how it works!

    Rule# 5- If you have subs working for you?, make DARN sure that they have workmans comp insurance IN FORCE when you hire them! If the sub you hire says that he/she is a sole proprietor and doesn't need WC? That's fine, BUT, the person you hired better be the only person operating the plow truck when you show up at the job site! If you get there and someone else is running it?, YOU HAVE A MAJOR PROBLEM!!! If you get there and there are 2 trucks on the job and they don't have WC, YOU HAVE A MAJOR PROBLEM! The only way you wouldn't have an issue is if the second plow truck was hired as a sub by the first sub-contractor you hired and this 3rd party operator is also a sole proprieter. Here again, you better make sure this 3rd operator has the correct insurance. If you don't? and they get hurt or have an accident? You have a serious problem!

    Are we having fun yet??:eek:

    Rule #6- Just because you are handed an Accord form showing you that the sub you just hired has insurance, Do not take that as gospel! Make sure you call the agent or CO listed on the certificate of insurance and verify the information listed. If you don't and there is a problem, accident whatever, you will pay for this mistake if the form was just typed up or fabricated by the guy you hired. The correct insurance is expensive and becoming harder to get for people with bad credit or a lot of losses, so it is becoming more and more common for people to lie about their insurance coverages just to get the job. Always make sure you CYA!!!

    Rule #7- If you hire a sub-contractor, make that person lists you as a "NAMED INSURED" on their insurance polices. In simple terms, this forces your subs insurance CO to defend, cover or indemnify you right up front if something bad happens and makes your insurance coverage become secondary and your subs insurance primary if the sub screws up.

    Rule #8- Make sure the sub you hired has limits of insurance that are equal too or HIGHER than yours. I can not stress this enough!!!!!!!!!!!!!!!!!!! If you don't and you get audited by your insurance CO and your sub has lower limits than you do? you are going to get a NASTY bill. The reason for this is because if you have $1 million per occurrence and your sub only has $500,000 per occurrence, your insurance CO will have to cover the $500,000 difference. When they find this, THEY WILL send you a bill for it and depending on how your CO comes up with the premium they charge you, it could be very, very ugly!

    After reading all of this, if you decide not to heed what I have posted here?, so be it. Just remember that it only takes 1 time for something to go wrong and you could lose EVERYTHING. If you get to the job site and one of the situations I posted above is happening? Tell that person to lift the plow and get out! Even though it may make your night a little longer with the extra work? it just isn't worth the possible issues that may come up later on! Do not buy any BS story from your sub. Do not believe it when he/she says "Oh, don't worry about that guy shoveling the walk over there, it's my brother and my agent says that since he is a relative, I don't need workmans comp on him" Unless that brother is a partner or an officer of the corporation, they need WC, PERIOD!

    Disclaimer: While I have been an agent for 20 years, I must tell you that I am only licensed in the state of PA. Everything I have listed here reflects directly upon the rules and regulations for the state of PA. As I wrote above, most states use the rules from the state of NY. Nothing you read on the internet should be considered perfect advice and I HIGHLY recommend that you speak to a local agent you know and trust. Policies will differ slightly in coverage from state to state and CO to CO.
  2. I would like to thank you very much for the above post! As the over 10 year owner of a medium size business, I am very lucky that I have a great relationship with my agent, so I was aware of most of what you stated, and never found out any of that the hard way! THIS SHOULD BE REQUIRED READING FOR ALL PEOPLE IN THIS INDUSTRY. Once again Thanks for the post and have a great holiday season!
  3. elecblu

    elecblu Member
    Messages: 79

    I would also like to say thank you for this post. As NPM stated, I also have a great relationship with my agent, and have learned what you stated, before it becomes an issue. Although I don't take on enough work to need subs, it is still useful information. THANK YOU !
  4. Spucel

    Spucel Senior Member
    Messages: 413

    My insurance company keeps the information on file for the company I sub for. Each year they send them a email & a letter stating my current coverage. If I were to ever cancel the coverage or get dropped, they email him immediately and follow it up with a letter. I think its really smart that they do this and protects everyone involved.
  5. mpgall26

    mpgall26 Senior Member
    Messages: 228

    Excellent post. I have found that many agents either don't understand it or are acting as though they don't. Example...Told many times that ANYONE I allow to use my vehicle is covered and I don't need to individually name them. I wrote a letter to the company to clarify this instead of going in circles with the agent and have yet to receive an answer. This agent went on vacation for 2wks when he was working on my GL and I went elsewhere for it, he never forgets to remind me that "The Company" is very upset that I did my GL elsewhere. I told him I wasn't gonna sit and wait till it was convenient for them when someone else jumps at the business. Needless to say I'm praying I get through this year with him and renew elsewhere when it's up. Don't want to front another commercial policy downpayment now.
  6. superdog1

    superdog1 Senior Member
    Messages: 255

    When you are shopping for insurance, finding an agent who does nothing but commercial insurance is your best bet. As an example, look at Doctors? When you visit your family Dr when you feel bad, he is a general practitioner. Depending on what is wrong with you, he may send you to a specialist. Even though your Dr. understands what the issue may be, he knows that it needs to be handled by someone who does the same thing every day. That way you get the best care possible for the injury or problem you have.

    Most single agents sell insurance that deals with personal lines. This is coverage for your family car, house and maybe simple life insurance policies. This happens because everyone is forced into buying coverage for their house and home, either by the mortgage co or state law. It is the majority of most agents bread and butter and it is what pays their bills, as it is an EASY sell.

    In my old agency, we sold annuities, investments and other financial products that went far beyond the simple "If you die, we pay $100,000" type of life insurance. These products are complicated, very regulated and required a very in depth knowledge to not only sell them, but truly UNDERSTAND them. They are regulated by the SEC and require special licensing. At one point many years ago, I had my license to sell these products. I gave them up, as I only sold one or two policies like this a year. It wasn't fair to my customers! Since I only did it once or twice, they were having heart surgery done by a general practitioner! We ended up with one guy that did it. He worked out of 8 different offices and would be called in whenever we had a request for something that he dealt with.

    Commercial insurance is not quite as complicated as what I just mentioned, BUT, if you don't do it every day, it is easy to mess something up, as it is MUCH more complicated than a personal lines policy. Most of the larger independent agencies have agents who only do commercial lines. This is the person you want to handle your business. You may even have to travel to a larger city to find an agent like this, but in the end, you can sleep better at night.

    Now, I am not going to say that every agent who works by themselves or just 1 or 2 in the office is stupid and has no clue what they are doing. There are some really smart people/agents out there. It is finding one who knows their poop and isn't giving you a big line of BS instead of cold hard facts that becomes a problem.:confused:
  7. Mackman

    Mackman PlowSite.com Addict
    from S.E. PA
    Messages: 1,356

    Hey superdog. if you still write insurance in PA give me a PM with your info. I would like to talk to you. Im thinking about dropping my agent cuz he can never call me back. I called him 3 times in the past 2 weeks and still havent gotten a phone call back. The guy is turning into a real joke. Thanks
  8. superdog1

    superdog1 Senior Member
    Messages: 255

    Sorry to hear that. Message sent!
  9. joepetrilli

    joepetrilli Member
    from NJ
    Messages: 33


    What a pain! I have been trying to acquire a policy so I can plow streets for the town. What a pain! I have GE for my Landscaping Bus. and they don't want anything to do with Snow Plowing. I have waited weeks for people to get back to me with quotes only to say we cant do it. Two said they can do it for $1650 but that's without the 1 million Umbrella the city wants. The one finally got back to me to say the umbrella would cost a additional $2700! WTF. I just invested in a new truck and plow for $50,000.00 and Plow Ins.going to cost close to $4500 and what if doesn't snow! I Hate this state Please if any one knows a good Ins. Company let me know I have been waiting for another quote and now the girls on vac and no one else there seems to know what she was doing or not.
  10. highhog1

    highhog1 Senior Member
    Messages: 112

    I don't know if this helps but I went through Erie insurance for my General and commercial vehicle ins. Very resonable. Try them. I'm paying 650 a year for 1mill.
  11. superdog1

    superdog1 Senior Member
    Messages: 255

    Your main problem is the state you live in!!!!!!!!! Since the 1980's, NJ has become one of the most heavily regulated states in the USA!!!! Most CO's will not do business in NJ because of this. Almost all of the major players in the insurance business left NJ a long time ago. The only reason the others haven't left is because the amount of business they have there would put them under if they pulled out.

    NJ is also a very litigious state. In simple terms, it means that you can't go to the bathroom without an attorney present, Lol Heck, even a simple fender bender in NJ will cost the insurance CO 3 times what the same accident would in PA. Another poster mentioned Erie insurance as a good place to get coverage. They are right, Erie is good, as they write insurance for almost any type of risk you can think of. Guess what?, they don't do business in NJ!

    I wish I had a better answer for you, but guess what?, I don't.:confused:
  12. contractor078

    contractor078 Senior Member
    Messages: 232

    Wow well after reading this i emailed my agent and asked some questions. I thought that I new the answers to and just wanted to hear it from him. Well i heard what i wanted too.

    My only question and he didn't really give me a great answer to is plowing roads for a HOA. what defines them as public or private roads? He had said if there are private signs on the entrances and no trespassing signs.....is this correct?
  13. superdog1

    superdog1 Senior Member
    Messages: 255

    Well, the answer is correct, but not very clear. In simple terms, it boils down to who owns the road? If the HOA is responsible to keep it clean, then it isn't a public road. If it was a public road, the township or municipality would be plowing it and you would be doing the driveways only. In most cases, the builder or contractor who bought, sub-divided and built the entire development will usually try to put the road in and then dedicate it to whatever municipality the homes reside in, as they are passing the long term cost of plowing and maintaining the road surface on to the taxpayers, as the long term costs for this type of thing are very expensive.

    Keep reading and bare with me, I am typing all this for a reason!

    On the other side of the coin, by dedicating it to the township or city etc. the road becomes public. This means that anyone, anywhere, anytime has rights of ingress or egress (translate: use it whenever they want!). Some HOA will keep their roads private, as they feel it is worth it to stop every Tom, Dick and Harry from driving around their properties. It could even be possible that by agreeing to pay for snow removal, the HOA could keep their public road private? (I seriously doubt this though?).

    In PA, some townships and boroughs are paid by PADOT to plow PADOT roads, even though the township etc. isn't responsible for them. PADOT does this because it is cheaper for them to pay the township to plow a 100ft section of roadway then it is to have the PADOT plow drive for 20 mins to do 5mins worth of road clearing. The $$ for this comes from the liquid fuels tax paid every time you buy gasoline at the pump.

    Anyways, I am telling you all of this BECAUSE, if you commercial auto policy excludes coverage for plowing on any public street and you are doing the HOA and they have an agreement with the township so that they can control who goes in and out and it IS a public street, YOU WILL HAVE NO COVERAGE IF THERE IS A CLAIM!!!!

    If your commercial auto policy excludes coverage for any PADOT road, or it just covers you for only one township or borough and you are unknowingly plowing another, YOU WILL HAVE NO COVERAGE IF THERE IS A CLAIM!!!!!

    You may think I am going overboard here, but these are all things that have happened to others. Lawyers and Judges do not care about oversight? There are no opssies or uh-ohs when it comes to these situations. Know what you are doing ahead of time.;)