I AM NOT WORRIED, I HAVE FULL LIABILITY COVERAGE FOR MY COMPANY…..

I AM NOT WORRIED, I HAVE FULL LIABILITY COVERAGE FOR MY COMPANY……….

WANNA BET?

I was asked to write a quick article on coverages that the industry thinks they have, limits of insurance that might not be as high as they think and coverages that they think mean one thing and they are not even close.

Since this is the beginning of 2015, it is an excellent time to sit down with your insurance professional to truly go over what your exposures are on a daily basis. I don’t think anyone knows them all. Heck I have been doing this for 20+ years handling thousands of pest claims and we learn something new every day. What about…………………How do you handle an employee that just came back from Africa where Ebola was within the vicinity? Yeah, got about 3 calls on that in one week.

I plan to list just a few of the pitfalls or possible deficiencies regarding certain coverages that I have seen over the last few decades. Many of these have probably cost pest companies thousands having to handle claims or suits on their own after their carrier denied coverage and walked.

Lost Key.

This is the one that is probably most common. I have seen a number of policies over the years where the insured thinks they have general liability coverage for say 1M-2M for everything. But low and behold a lost key claim comes and you find out you only have 50,000 or 25,000 in coverage? Really? This one I really don’t get. The vast majority of the claims are nuisance. Re-key 25, 50, 100 or more locks. Maybe get security out for a day or so. The 25K or 50K coverage is usually plenty of coverage to handle these exposures.

How about the employee that does not tell the owner he lost the key until it is too late? Somehow word gets out in the apartment complex and there are multiple thefts. Even worse, what happens to you if the key is lost and someone breaks in and attacks someone that resides there? Without expanding what egregious things might happen, the question is do you think 25K or 50K will settle that claim? Scary thought.

Oh what about state insurance laws? Most states have minimum insurance limits requirements. Some are ridiculously low but a lot are 100K or more. Does that now mean your insurance does not reach the threshold of the state minimums with coverages at 25K to 50K? Are you subject to fines if the regulatory people decide to inspect and pursue if true? Not sure that has happened but do remember about 5 years or so ago Texas really started looking at insurance policies and the limits of coverage. That was fortunately thwarted after the state association and a few others worked with the Texas regulators and have not heard anything since. But is it totally impossible that this could ever happen?

Pollution

One if not the most confusing coverages to a PMP when you discuss what is and is not covered. I really believe that most think they have coverage for just about any pollution claim that occurs outside an intentional act. Below are just a few pollution exposures I will go over.

  • Auto Pollution-You are going down the road and someone runs a stop sign and hits your truck on the side. The truck flips and you have about 20 gallons in the tank. The product spills onto the street, oh better yet-down a drain. State comes out and the clean-up and disposal starts. We have seen costs range from 5-50K. So the questions are:
  1. Most auto policies that we have seen do not cover pollution claims so does your GL policy cover any pollution exposures?
  2. If the GL does cover pollution claims, do they cover if originated from the auto? That one is VERY important.
  3. If they do cover auto pollution claims what are the limits of coverage? Like stated above, you might think you have limits of GL insurance of 1M/2M for everything but you find out later your policy only allows limits of 50K or 100K?
  4. Again does this 50-100K sublimit fall within state regulatory insurance guidelines?

The reason I bring this one up is we had a situation 10 or more years ago. Truck flipped and about 30-40 gallons go all over this person’s yard. Clean up of the property damage was only like 15K. That wasn’t the issue. It was the 2 attorneys’ letters we received representing around 15 people stating they were sick and claiming damages, etc. We got out of every one of these alleged injury matters but the question is could YOU have done that if you don’t have the proper coverage and had to handle on your own?

What about the person that handles the claim with the carrier that really does not understand the perception of pesticide pollution exposure vs. the reality of exposure to the public?   You might have a 50K sublimit, the insurance company decides to pay the 50K just to get out of it and then the attorneys decide to go after company assets? Think that is far-fetched?

Other pollution exposures:

  • Wind drift
  • Tech accidentally over applies a termiticide in the home (ask the TX PMP about that one)?
  • Tech uses the wrong product, again accidentally?

Covered????????

Claims Made (Reporting) Policies and Endorsements

This coverage issue could be an article on its own. Claims made policies that will not cover you if you report claims after a limited time is allowed once your policy expires. Saw a situation where the insured renewed the policy with the same carrier for about 3-5 years. The problem was the carrier issued another (different) policy number each year. So when the claim was reported they stated the claim was reported late and the previous policy expired. The claim was reported after the allotted time and therefore, NO COVERAGE! Even though they were with the same insurance company, the new policy number allowed them to deny coverage on the claim. This one still aggravates me to no end.

Thankfully just about all the GL insurance policies are on an occurrence basis. That was not always the case but for now this is great for the industry. The problem is the “language” in certain Endorsements we have seen over the years that can get you. Some examples are:

  • If the house had not been retreated for termites in 7 -10 (something like that) years, you continue to renew the termite contract and they get termites-NO COVERAGE!
  • If the carrier could not determine if any damage occurred during their time of the policy even if live termites were found during that time-NO COVERAGE! (This one is very complicated. Saw a very good pest company that was in business for decades having to close after this claim).
  • WDIRs-This is pretty common especially in the past which even some of our old polices restricted coverage. If a WDIR was done and a claim was reported 25, 36 or 48 months later-NO COVERAGE! Again thankfully most policies got rid of that “sunset” endorsement but you really need to check. Still might be one or two around.

You really need to remember that a lot of this falls on the person that is handling the claim for the carrier. Some are very good, they know the industry and work hard for their insureds. Then there are others ………………………

Conclusion

It is absolutely amazing the number of claims/suits that have occurred over the years where the insured truly thought they were covered or had more limits of insurance than they thought. Some of these companies had to pay their own way to settle or defend to conclude. We are talking thousands of dollars out of the PMP’s own pocket.

No one policy is perfect and doubt there ever will be. I have had to deny coverage on claims in the past where there was definitely a difference of opinion between the carrier and the insured. Most times I agreed with the insured but the carrier will make the final decision which could be very expensive in the end.

The real and responsibility is yours. It is your job to make sure your agent and the carrier know what you and your employees do out in the field. Talk to your peers and learn from them if they have gone through coverage issues with their insurance carriers. A lot of times it is the PMP that made the coverage issue occur and learn from their experiences.

The more time you take to learn your exposures and what your policy allows or excludes you will be in a better position in the future to state, “I AM NOT WORRIED, I HAVE FULL COVERAGE FOR MY COMPANY.” Good luck.

HOW IMPORTANT ARE PEST/TERMITE/FUMIGATION CONTRACTS?

I hope to be writing a new article for pest companies very soon about the need and importance of issuing contracts for pest services. 

We know of PMPs that market their services as “contract free” or something similar that can be effective……..now.  It is down the road that is the problem and I can assure you that on most occasions where a claim for damages or injuries do occur, you will be at the mercy of a judge or jury on who is responsible especially without a contract.

I am putting this blog out early because in just the last 2 weeks we received 3 claims on bed bug matters and one general pest situation.  Damages and injuries are being claimed and in EVERY one of these situations, the insured did NOT have a contract between their office and the customer.  The bed bug situations are with residents so guess who gets to choose where they can file a claim-if not both parties.

Especially for commercial accounts you really need a contract of some kind.  We have many examples of contracts for all kinds of pest services. The contracts range from very simple to extremely complex. The key is ISSUE A CONTRACT!  Keep an eye out down the road for my extended article on this issue. Good luck.

LIPCA Insurance to run a new StarNet Insurance Company and Gemini Insurance Company Pest Program.

It is our honor to announce that the LIPCA Insurance National Pest/Lawn Program and Berkley Underwriting Partners, a member company of W. R. Berkley Corporation who owns A+ Rated-admitted paper, StarNet Insurance and A+ Rated-surplus lines, Gemini Insurance have teamed up to bring the industry an experienced and quality program for its insureds. LIPCA is 100% owned by pest and lawn professionals and their experience in knowing the exposures and coverages are second to none. Berkley has been writing pest professionals with their insurance companies longer than almost anyone. We feel this partnership will give the pest/lawn industry an insurance program that actually cares about their business and service their customers on a daily basis. Considering this is still our only program, it is easy to focus on the needs of our insureds.

While our Lloyds of London program was a great partnership with some of the best people you could do business with, the Berkley program was a better opportunity for our insureds and LIPCA.

As most of you already know one of the major strengths of the LIPCA Program is claims handling. When Berkley approached our office we stated it was imperative we continue to handle the general liability claims for our insureds. Once they had a chance to see our claim’s office, personnel and how we work with our insureds and their customers, they enthusiastically wanted us to continue to handle the general liability claims. With certain carriers writing pest companies and the limited experience of knowing claim exposures and coverages, it is imperative for the PMPs to be best protected which could save the insureds and their agents from possible issues down the road.

HIGHLIGHTS:

• A+ RATED ADMITTED AND SURPLUS LINES POLICIES. THE SURPLUS LINES IS VERY SIMILAR TO OUR LLOYDS OF LONDON PROGRAM BUT EVEN STRONGER

• PROPERTY, INLAND MARINE, UMBRELLA/EXCESS COVERAGES WITH BOTH ADMITTED AND SURPLUS LINES POLICIES

• EMPLOYEE BENEFITS LIABILITY COVERAGE CONTINUES AND NOW STOP GAP COVERAGE. BOTH WITH EITHER POLICIES

• WORKERS COMPENSATION, AUTO, CRIME AND OTHER COVERAGES WITH OTHER CARRIERS AVAILABLE IN CERTAIN STATES

• CONTRACT AND DOCUMENT ASSISTANCE FREE FOR OUR INSUREDS.

• COMPETITIVE COMMISSIONS FOR GL, PROPERTY AND INLAND MARINE. DIFFERENT COMMISSION SCALE FOR UMBRELLA AND OTHER COVERAGES.

Many carriers have come and gone writing pest control since 2000. Many have made the mistake of writing premiums too low, coverages that are volatile in certain states, poor claims handling, etc. At LIPCA we feel we have avoided many of these mistakes and have stayed the course of writing good and profitable pest/lawn business for decades. For those agents that write with LIPCA, our sincere thanks. We feel the trust you have with our office and employees has been proven to be a great decision for your insureds. We hope to continue to earn that trust.

For those agents that do not currently write with the LIPCA Insurance National Pest/Lawn Program, we cordially invite you to be part of something special. We are with a proven insurer that knows pest control and have the faith and wisdom to allow LIPCA to administer the program. We do not have or have requested any information from any source of who is presently insured with StarNet. This includes agents information as well. We are simply sending this email to in hoping for the opportunity to be with a proven carrier and a very proven insurance program that we feel knows your client’s exposures better than anyone. I am sure we can match any proven commission scale presently allowed. It is a win-win for everyone.

For those receiving this email that need an agent or would prefer to stay with the StarNet Insurance (or Gemini to save $$$) please feel free to contact me immediately. We have the greatest agents that would be more than happy to assist you in any way possible.

Finally for those agents that do not want to work with our office, we understand. We wish you nothing but good luck as there is plenty of business for everyone hoping we all pursue the business as insurance professionals. All we ask is that if you speak about our program you have your facts straight. For the last 6 years we have taken the high road in handling our business with Lloyds of London. Some agent/programs have not. I was taught to sell your yourself and let others make the mistake of not selling themselves. Again please make sure you have your facts about LIPCA and Berkley.

I am sure there will be plenty of questions which we are happy to answer. I am hopeful that we will speak in the near future about our wonderful pest/lawn program. Thank you.

Andy McGinty

EVP/COO

LIPCA

3042 Old Forge Dr.

Baton Rouge, LA 70808

800-893-9887 EXT 7016

f)225-927-3295

andy.mcginty@lipca.com

IMPORTANT NOTICE: This message is confidential and for use by the addressee only. LIPCA coverages are subject to the policy terms, conditions, and exclusions detailed in the insurance contract issued at purchase. Quotations on insurance are provided as estimates and are not an insurance contract. Eligibility requirements and coverages can vary by state. If you are not the intended recipient, you must not use, disclose, distribute, copy, print, or rely on this message. Please notify the sender as soon as possible and then delete or otherwise destroy the message and any copies thereof. No responsibility is accepted for changes made to this message after it was sent nor for any loss or damage from receipt or use. Communicating via e-mail does not constitute an offer of coverage.

CONTRACTS AND GROSS NEGLIGENCE

CONTRACTS AND GROSS NEGLIGENCE

This will not be a long drawn out legal explanation of what Gross Negligence is and all of its legal ramifications as I am not a lawyer so not qualified legally. I also do not want to bore you to death with a lot of Latin mumbo jumbo.

The reason this is a very important subject is to know what gross negligence means in the realms of pest and lawn control and its exposures. What it means to your business as well as to the insurance you have and the premiums you might have to pay.

Let’s start with a simple definition of gross negligence:

Gross negligence is a conscious and voluntary disregard of the need to use reasonable care, which is likely to cause foreseeable grave injury or harm to persons, property, or both.

Seems pretty easy to understand. With regular negligence you accidentally hit a pipe while drilling for a termite job. It happens all the time. But what happens if you drill the same house the next day? You don’t find out where other pipes might be and you hit a gas pipe and the house explodes? Is that Gross Negligence?

The main reason for this blog is to simply state a PMP needs to have a gross negligence clause in the contracts they have with their customers. The language is very simple and could be as easy as this:

Under no circumstances or conditions shall the Company be responsible for damage or injuries caused by the Company at the time the work is performed except those damages resulting from gross negligence on the part of the Company.

How many times have you heard PMPs:

1. Drilling into a pipe

2. Move furniture causing damage to floors or carpet (watch out for the new cushion vinyl flooring)

3. Treating carpets with a pesticide causing a stain (rare these days thankfully)

4. Pet accidentally dying due to product application

5. TERMITE DAMAGE on a retreat only contract-VERY IMPORTANT!!!

6. Misdiagnosing an insect or not being more specific: Subterranean vs. Formosan termite (yes we handled that lawsuit)

7. Bed bugs re-infesting a room biting a customer

There are so many more examples we could add to this list on claims that we have handled over the last 20+ years. A Gross Negligence clause possibly could have allowed our insureds to walked on the claim or pay a smaller percentage. That is the bottom line.

The insurance market is hardening and we feel in the next few years premiums will increase with it also getting harder and harder to find affordable insurance if you have a claim. A Gross Negligence clause in your contracts can help avoid that problem.

LIPCA was created to help its insureds on matters just like this. We feel there is no other national pest/lawn program like ours in the U.S. There are a lot of new carriers writing pest control insurance. Be careful please. Good luck and if you have any questions about this blog or about LIPCA please feel free to contact me at andy.mcginty@lipca.com or 800-893-9887 ext 7016.

Additional Insureds. Is it enough?

We had a situation where one of our insureds sold a fumigation job to a customer. Our insured hired a fumigator (sub-contractor) to do the job. A normal course of doing business that occurs every day. Our insured gets a certificate of insurance (COI) from the fumigation company to verify insurance and also gets listed as an additional insured under the fumigator’s policy.

So everything should be ok should the fumigation company have a claim and our insured be brought into any litigation right? WRONG!

A suit was served on our insured due to damages after a heavy rain that caused the tarp to tear and water getting inside the home. It happens and these types of claims are easily denied if there is a strong contract issued or you can settle for a small percentage of the damages. But that was not the problem.

Our insured sent us the suit papers; we obtained the insurance information where our insured was added as an additional insured as stated above. We contacted the insurance company (claims provider) for the fumigation company immediately to handle the defense for our insured due to the allegations of the suit, the additional insured and overall the proper way to do business right. You would think that would be enough right? Again………..WRONG.

The insurance company (claims provider) for the fumigation company stated that they would not supply a defense for our insured for a couple reasons. One was the way “they read the allegations” it was not clear that the fumigation was liable for this claim. The second was since the insured, and this is what is important, was not listed as a primary additional insured then their insurance was only excess and did not have to supply them a defense. Really? Of course I found out later the background and/or experience of the adjuster handling this matter was not substantial in comparison, but I digress.

So I asked the adjuster what does liability and the suit allegations have to do with the issue of defending our insured due to the actions of the fumigation company? Coverage comes before liability which you learn first day as an adjuster. The response……………crickets!

To make a long story short, we decided to go after the fumigation company due to actions of their insurer and believe it or not…………the insurance company is now defending our insured. Ripleys! Unfortunately this was not before we had to get defense counsel and threaten any and everybody to do their jobs. Now the insured has to pay a deductible but we are still fighting with the other carrier to pay our bills due to their “inaction” at the beginning and save our insured having to pay anything.

The bottom line is this. Any agent can sell pest insurance. Now there are those that are a lot better than others and that is a give. But with just about all pest insurance programs, the claims are handled outside the agent’s office with very few exceptions. LIPCA being one!

The examples of questionable or poor claims handling we have seen over the years with pest control exposures is quite scary surrounding: coverage issues, paying on claims that should be defended or vice versa and other examples. It is amazing what I have seen over the last 20 plus years. Shame really.

Remember the decisions by others on claims can affect your business for a very, very, very long time. Be careful.

 

DIFFERENCE BETWEEN SELLING PEST/LAWN INSURANCE AND HANDLIING PEST INSURANCE FOR THE PMP.

DIFFERENCE BETWEEN SELLING PEST/LAWN INSURANCE AND HANDLIING PEST INSURANCE FOR THE PMP.

We have had a number of new insureds contact our office lately about getting quotes with our LIPCA INSURANCE NATIONAL PEST/LAWN PROGRAM. These are well established pest/lawn companies as well as new PMPs that are starting new businesses.

After discussing the services they are providing their customers and their insurance coverage needs it is amazing how many PMPs we speak with seem to have inadequate coverage, wrong limits of insurance, deductibles that might be too high/low. We see other issues that are could provide problems regarding sub-limits, sunset clauses and exclusions that seem to be very much common sense if you know the pest/lawn industry and its exposures.

There is a difference of selling pest insurance versus handling pest insurance for the pest professional. LIPCA Insurance was created and is owned by the pest industry and this is our only program. We focus on your needs and exposures every day. We can assist you and your agent to make sure you have the protection you need. Please feel free to contact our office at 1-800-893-9887 ext 7016 or email us at info@lipca.com.

Learn to Listen and Listen to Learn

I was speaking to a potential pest management professional about writing their business and we were discussing claims and loss control. We spoke about the typical claims with the usual questions about the worst claims we have handled, common issues on why pest professionals have claims and overall the best way to avoid the claims you truly can control.

Well I have spoken about this subject for many, many years. Speeches about documentation, customer relations, hiring practices, office training and quality control have been heard by many pmps all over the country. He was appreciative of the time we spent with him while he asked his questions which he obviously wanted answers to hopefully protect his business. The funny part about our conversation is I think I got as much or more from our discussion than our insured did-yes he came with our program.

He stated to me that one of the lessons he learned very early in his business carrier was on simple thing. He was taught “LEARN TO LISTEN AND LISTEN TO LEARN”. What a simple thought and what a great lesson. I don’t know if many of you have heard this saying before and if you have I am hopeful this is a great reminder to use this practice.

LEARN TO LISTEN
I see this for all ages and experience but mainly for those that are new to our industry. The technique of learning to listen if one that is crafted over time in my opinion. I think there are very few people that can grasp a new subject or issue from the start and really hear all aspects of the subject correctly the first time. Most of us think we heard that you must complete a treatment graph this way and find out later there were a couple or things that you forgot to list or graph on the diagram.

Other discussions you have heard on what to and not have in your contract-arbitration clause or not? What terms to use and not use-chemical or product? What about the term Termite Certificate or WDIR/WDOR (depending on the state). I have still yet to see one WDIR document where the title is Termite Certificate but I hear that term used almost every day.

LISTEN TO LEARN
This term to me is the key. Once you have really grasped the ability to really listen to others that know more or have experienced more than yourself, that is when you will truly learn a lot more about the pest industry.