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More Insurance Frustration

Discussion in 'Business Fundamentals' started by jjklongisland, Oct 24, 2008.

  1. jjklongisland

    jjklongisland Senior Member
    Messages: 470

    As some of you may have read in my prior posts and offered advice which I thank you for; I am now confused. One more time for clarification.

    I contacted my agent and told him the following; I am looking into the need for insurance for snow plowing. I explained that it would be for plowing Landscape Company at commercial sites on a per storm basis (most likely 5-8 events per year) and I will not be listed on any of the contracts essentially working as a sub-contractor. First is General Liability. If I am listed under the contractors policy I will be covered under or it will be $1800 for my own indidual policy. Second is car insurance; he siad I would need a commercial policy (around $1500 - $2000) to cover me for auto accidents while in the act of snow removal.

    I spoje with my plow guy and he had me call this other insurance guy who is also an allstate rep which is what I am currently covered under personally. He said that because I would only be plowing part time and once in a while I would not need additional coverage. He also said the contractor I am working for can be added as additional insured on my policy.

    It doesn't make sense. The second guy said if I get into an accident while plowing I would be covered up to what my policy states ($100,000/$300,000). Because I am only part time and it isnt a full time business and I am not incorporated etc there is no need for a commercial policy. Regarding G.L.I., he said because I am not listed on any contracts than there would be no reason for anybody to sue me for slip and falls especially because I am not sanding/salting. He said they can only go ofter the contractor who signed the contract and because I am working as a sub to him they could not get me for anything.

    Does this make sense? Is my guy just trying to sell me additional coverage to make extra money?

    Also why would I or to why does the landscape company want to be listed as additional insured under my policy which they said doesnt cost anything extra?
  2. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    If your plowing for money you need insurance. If you are plowing your personal driveway you don't need commercial insurance. Once you drop the blade and plow your a business.
  3. 06HD BOSS

    06HD BOSS 2000 Club Member
    Messages: 2,611

    yikes, i would be very uncomfortable with that low coverage on a work vehicle.
  4. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609


    i have been through the same conversations with insurance people and heard the same speech about being covered. If you are plowing under strictly a personal policy (no rider or anything on it) the insurance company is more likley to refuse any claim. If all you do is plow commercial the insurance company has a pretty good case for the refusal. If it isnt a main source of income then the basic use of your vehicle is in line with your policy so, they will be less apt to try to deny the claim (thinking they wont win) but would probably drop your coverage after paying it out. It is even less likely they will deny the claim if you flat out tell the agent your plowing commercial and they note the account of it. Then you have notified them of the additional risk.
    The case for a possible denial is you are subjecting them to undo risk without notifiy them or compensating them for the additional risk. If you plow as a part time occupation then the risk is less and they may not have enough justification to refuse the claim.
    Keep in mind insurance is not a guarantee of coverage no matter what you carry. There is no guarantee of them covering any claim even if you are insured properly. Claims are paid based on them comply with possible state laws and there likley hood of winning in a court case if they are sued for not paying it.

    That being said, Most insurance agents will tell you the personal policy will cover you because it is unlikely the company will refuse a claim since the principal use of your vehicle is not plowing. I've gone round and round over this (as some on the site know) and have only found ONE case in which someone on strictly a personal policy had the claim denied that had a vehicle with limited commercial use(key word limited). And even that ended up going to court and the insurance company ended up having to pay a portion of it.
    Thousands of accidents happen plowing and i think for me to only find one case of a denial is pretty good odds they will cover it. That is why most agents tell you you are covered and the company will pay the claim but drop you after. I have even been told that the insurance company HAS to pay the claim because the odds of them winning in court are little to none.
    BUT... do you want to take the chance or would you rather know to the 99% that they will pay it?
    I think you should just get the right coverage but you can decide for yourself.

    Im sure someone will same something about this post. If you feel so inclined please post a link in your thread of the court case or article of the denial because after searching myself, i would be interested to see more examples.
    Last edited: Oct 24, 2008
  5. 042500hd

    042500hd Senior Member
    Messages: 251

    They want to be listed as additional insured because they are the contract holder. What will happen is you'll hit the building. The customer will call the contract holder he'll report the claim and say my sub was doing the work. They'll say where is his policy and are listed as additional insured? Then they will contact you and your company to cover the claim. A couple of things worth knowing or looking into; in NY we have a certain dollar amount that can be subbed out before the sub needs to provide his own insurance I think that amount is $5-6k. Also the guy subbing to you has the option to put you on his policy as a sub, that's a pretty standard offering by any reputable insurance company. At the end of the day if you have not agreed to a contract where you hold harmless and indemnify the contract holder he will always be the one to assume liability. It's very difficult for a customer to sue a person they didn't hire.
  6. jjklongisland

    jjklongisland Senior Member
    Messages: 470

    042500 - Please check PM

    Bribius - Thanks for the reply. You were helpful. I just wish I can find an insurance that doesnt contradict each other...
  7. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    Basically, after all these years, I've gotten tired of writing about insurance. People keep wanting to try to beat the "system". Won't work, but do what you want to do.
  8. jjklongisland

    jjklongisland Senior Member
    Messages: 470

    Nobody is trying to beat the system. The system is flawed. If I only plow 5 times per season, and live in NY, why should I have to pay double or even triple what other people pay when they live in Maine, and plow 25 events. How is that fair. Pay $3000 to make $4000. That doesnt make much sense. Much less risk since we dont plow as much.

    Mick, what percentage of insurance do you pay compared to the money you make. If you make $20,000 per season and pay $2,000 per year in insurance than at 10% its worth it.
  9. framer1901

    framer1901 Senior Member
    Messages: 852

    I think this insurance thing is a bit twisted around.....

    Look at it this way - I'm a builder that also plows snow. I have contracts with many different types of customers. I have people driving my trucks and subcontractors driving their own vehicles. I carry workers comp, comercial vehicle liability and a general liability policy for construction with a snowplowing rider.

    The subcontractors that work for me don't need insurance, they just get paid less. What?? Don't need insurance?? That's right, BUT, you get paid less. Most if not all general liability policies have an audit once a year of your business. The audit covers your payroll and how much you paid subcontractors if any. With the company I'm with, if you pay a subcontractor more than $1000 they want to see a copy of their general liability policy BUT if a sub doesn't have a policy, I am charged x% of what I paid that sub for labor, key word is labor. For instance, an electrician I use is way cheaper than a "normal" electrician, he bills me labor and materials seperately because he has no insurance. The 8% of his labor I pay to my insurance company is cheaper than him getting a policy and with that added on top of his bid, he's still cheaper. This goes for workers comp also....

    Each trade is treated differently with the insurance cost, plowing, framing, roofing HVAC etc., I just know the cost and deduct it from what you'd be paid to plow if you carry your own insurance.

    Also, if you plow for me and run thru a building, my customer isn't calling you for your insurance, they call me. Now my insurance company behind the scenes will surely go after your insurance company, if you have one, but the customer contracted with me not you....

    Bottom line is your insurance will only positively covered what is written in your policy, plowing for money makes you comercial. A business owner can insure his subs if he chooses
  10. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    My insurance is not set as a percentage of income. If it's not worth it, then I'll quit plowing snow.
  11. d&rlawncare

    d&rlawncare Member
    from mi
    Messages: 39

    On top of all this if you dont have your sub list you as a certificate holder or additional insured (i believe this is the same thing) then when your insurane company audits you and you showed you subbed work out they will have to have a copy of your subs policy with you listed as additional insured (certificate holder). If you dont have it they will send you a NICE big bill to cover the work your sub did.

    I learned this the hard way. I had a copy of his Insurance on file but was not listed as certificate holder and they biller me an additional $550 this year for the work he did last year. They are still trying to straighten it all out.
  12. framer1901

    framer1901 Senior Member
    Messages: 852

    On top of all this if you dont have your sub list you as a certificate holder or additional insured (i believe this is the same thing) then when your insurane company audits you and you showed you subbed work out they will have to have a copy of your subs policy with you listed as additional insured (certificate holder). If you dont have it they will send you a NICE big bill to cover the work your sub did.

    I live in MI also and I DO NOT have that problem at all - I have a file with maybe 30 subcontractors insurance copies, during my audit, I show them the copy - no problems.

    A problem is when you can't show valid insurance during the payment time frame.

    The understanding I have of additional insured or cert holder is they (the additional insured) get notified when or if you cancel or change your policy. this is done so that you can't obtain a policy to get a job then drop the policy once proof is shown. I've had one sub whose policy I was named on - he retired/quit and I was notified.

    It'd be the same thing as a business owner requesting any sub to put them on as additional insured just to cover their butt making sure they don't have to pay insurance on them. In construction, we request a copy of valid insurance before any payment is made.
  13. Ipushsnow

    Ipushsnow Senior Member
    Messages: 314

    When I have an insurance audit if I don't have a certificate naming me as additional insured from a sub then my insurance company take the money that I paid that sub and treats it as wages. I pay the workers comp premium on that amount. Depending on what that sub did sets the rate, carpenter is like 18%, electrician is like 14%, roofer is about 20%, etc.
  14. scottL

    scottL PlowSite.com Addict
    Messages: 1,613

    Wow many different perspectives.

    I carry a contractors policy for a large amount which lists snow plowing specifically. It's from StateFarm and actually not expensive at all. I of course have everything with StateFarm so maybe I save a few bucks. I have subbed for 11 seasons and not once have I provided my insurance to the guy I sub for but, I keep it in case his policy should fail.

    I now sub and have subs as I am running a decent route on my own as well. During insurance audit time I have to provide A) a copy of my subs insurance certificate and amount paid out and then I am charged a buck or two per thousand paid out. If I do not have the certificate I essentially am buying another policy.

    As for listing the vehicle as commercial .... Really depends upon state and insurance carrier. I am not carrying people, product or public works nor am I a fleet - I am then not commercial.
  15. framer1901

    framer1901 Senior Member
    Messages: 852

    Scottl - State Farm? Them punks dropped my contractors policy one year in June due to snowplowing - said they weren't covering it anymore. They agreed to carry it till my policy reup date in November since there was little chance of plowing in the summer. Long story but I was in the process of switching anyways. BTW - I never had any kind of claim whatsoever on the contractor policy, my ex wife was in a bad accident, but never any business claims.

    I have Farm Bureau now, they cover everything. Audits for both companies are the same.
  16. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    and that is who i have and why im still shopping.
    you guys on the L1 utility vehicle thing too with a plowing rider?
    small world.

  17. scottL

    scottL PlowSite.com Addict
    Messages: 1,613

    Not sure why Farmer1901 was dropped or that SF stopped covering the policy. I've had them for ever and the plowing for 11+ seasons - no issues. I've had great luck with them but, then I have never taken my truck through a corn field and claimed aliens crapped on my hood. :D

    As for Bribrius - When you say L1 with a rider .... I assume you mean the type of policy. In my case it's a full blown legit contractor commercial policy for general contracting with specific note of snow plowing.

    What I have noticed is that not all agents will write the same policy or know of what they can or can not do.
  18. basher

    basher PlowSite Fanatic
    from 19707
    Messages: 8,993

    If a suit is filed, everybody gets sued. The Lawyers use their own paraphrasing of an Marine slogan, "Sue them all, let the courts decide"

    If the contractor you are subbing for is sued and you're not specifically included it's still not over. Worse case scenario they lose and HIS insurance sues you in a supplemental suit.

    The requirement to have commercial insurance is more then a money saving thing for the contractor. Often it is a requirement of his insurance. To me a certificate of insurance also provides assurance that the sub has adequate coverage, is responsible enough to maintain insurance and has a vested interest the safe and complete performance of his job. Also means I can comfortably 1099 him at tax time. Particularly if the jobsite is out of my immediate control. It also guaranties there are "pockets" to cover his expenses if something happens.

    If the sub has personal insurance he makes less money, because my insurance company treats him as an employee, these things have to be deducted when calculating the $ worth of a Sub(though in this case he's not he's an employee, the best you can hope for is to get away with 1099 and not have to do fica,medicare, unemployment training, local, state, federal withholding, etc .......) My insurance company doesn't make the distinction between personal insurance and personal insurance w/a snowplow listed.

    If you have personal insurance and the policy specifically lists coverage on the snowplow you should be covered for any driving incident that occurs with your blade on. DON"T confuse auto coverage with General Liability coverage auto insurance does not cover you in a slip and fall suit. That is not an auto issue, backing into a parked car or sliding though a store front, that's an auto issue.
  19. tjlands

    tjlands Senior Member
    Messages: 579

    Here is another wrench, I do beleive that it does differ from state to state. In NJ if you use your truck or vehicle to make money you are required to have commercial plates. Thus you need commercial liability(slip and falls) and commercial auto(accident).
  20. Matt Hart

    Matt Hart Junior Member
    Messages: 24

    I know this is an older post, but everyone seems to get mad when new posts are created.

    If I have commercial auto insurance through progressive where do you get General Liability in addition to that? When I was switching my truck to the commercial policy Progressive said they do not offer General Liability. Who do you guys use for that?
    Last edited: Nov 24, 2008