Snowed Under

An increase in slip-and-fall claims has put pressure on insurance premiums for snowplow operators, which has left some contractors struggling to remain in business.

Dave Fraser, owner of DHF Contracting in Oshawa, Ont., says his business, which employs up to 25 people, was a hair’s breadth away from closing down in November when his insurer said it would no longer underwrite the snowplow portion of his business, which accounts for 70% of the contractor’s revenue.

When shopping around for new insurance, he found that premiums had skyrocketed well past the usual annual price inflation. “My broker notified me that my [former insurer] wasn’t insuring snowplow operators and I was quoted a new, ridiculous price — from $16,000 a year to over $60,000,” Fraser says, adding that he would still have the same $5 million in liability coverage. “Nothing changes except the price.”He found a new broker who specializes in insurance for landscaping businesses. At $52,000 a year, his new premium was slightly less expensive than the previous quote; still, it was a major departure from the rates he was quoted during his previous years in business.

Broker Stephen Halsall says not only have some insurers stopped underwriting snowplow operations, the ones that are still in the market have a longer list of requirements and specific areas they won’t underwrite. “It’s tough for people who work in those industries,” says Halsall, owner of Saint John, N.B.-based All Coverage Insurance. “Whatever you are snowplowing, too much responsibility gets thrown on the operators. We expect perfection but have to realize it’s winter and no one can monitor sidewalks all day long.”

In the summer months, Fraser’s company does landscaping, swimming pool maintenance, and other related projects. But that’s the easy part of the business from a cost-of-insurance perspective. “Because of all the slip-and-fall claims, it’s the snowplowing part of the business that is killing us and the insurance companies,” Fraser says.

Indeed, slip-and-fall claims are the biggest liability on the shoulders of snowplow operators, Halsall says. “[Insurers] are not worried about vehicles hitting property or other vehicles, although that happens,” he says. “The biggest [risk] is slip-and-falls and how it relates to [maintaining areas] with sanding and salting after they do the job. How much responsibility can you shift to the contractor, with all the freezing and thawing and different storms we have?”

As fewer carriers underwrite snowplowing operations, there may come a time when insurers no longer want new business, Halsall warns. “Insurers may reach a tipping point. There’s no magic solution. They can’t write business that is unprofitable. But as the blame [for slip-and-falls] gets shifted to contractors, it will continue to be a problem.”

Intact Insurance uses caution when underwriting snowplow operations, a company representative told Canadian Underwriter in an email. “We pursue best-in-class operations within our underwriting parameters,” the company states in its email. And, with the exception of Quebec, the company “has a ‘Snow Removal Operation Questionnaire’ for this purpose, as we may consider snow removal contractors depending on the type of vehicles and type of area being worked on. Intact focuses on those who are committed to this operation and have a proven track record.”

Increased slip-and-fall litigation has changed the game, Halsall contends. “Everything is getting busier, cities are growing, and more claims are brought forward to look for compensation from another party. There were many cases of slip-and-falls in the past…where people would never pursue legal action. Now it’s more the norm.”

Coverage for operators clearing public areas is the toughest insurance to procure, says Gary Hirst, president and CEO of Toronto-based managing general agent CHES Special Risk. “A lot of big corporate entities that have public places in need of snow clearing have extremely onerous contractual conditions that pass on all liability to snow-clearing contractors,” he says. “That is driving an enormous number of claims, culminating in markets pulling out of the sector.”

Personal injury awards are higher, which is reflected in the insurance premiums. “In the past, people would slip and fall and walk away with a bruise,” Hirst observes. “Injuries are more severe now. And the legal system makes it easier to make an injury claim.”

In some instances, only a verbal agreement exists between the property owner and snowplow operator, leading to arguments over liability. For example, a landlord will require snow to be cleared but won’t pay for salting or de-icing, which can lead to hidden ice patches.

“Where there are [verbal] agreements, there are arguments,” Hirst says. “There are an enormous number of disputes between two parties.”

Snowplow operators that do buy insurance are usually contractors with substantial revenue, Hirst explains. The smaller guy is being pushed out of the business. And in this difficult market for snowplow operators, risk management will play an increasingly important role.

“Insurers will look at the way snowplow operators are managing risk,” Hirst says. “If an operator has a contract with a landlord who has a car park, for example, is the operator checking the property in the summer and autumn, and alerting the landlord of maintenance problems? Insurers need those types of logs.”

Snowplow companies should undertake a number of risk management practices, Halsall recommends. For example, they should keep driver logs, ensure equipment maintenance, and management should provide project supervision and follow-up. “Risk management is a key factor and underscores the professionalism of the contractor you are dealing with,” he says. “It’s an advantage and the best ones will have an easier time finding insurance.”

Tony DiGiovanni, executive director of Landscape Ontario, a professional association of 2,800 landscaping companies, of which 700 run snowplowing operations, said the situation is so dire that a special members’ meeting was called at the association’s recent conference. “We called an emergency meeting because I was getting many calls a week from snowplow operators in a panic about the insurance situation,” DiGiovanni says. “We had six contractors talking about the issue, what they are doing about it, and how to mitigate risk.”

Some contractors have reported laying off staff, and all are having trouble finding insurance, DiGiovanni says. So much trouble, in fact, that members are considering establishing either an insurance co-operative or captive insurance company to remedy the situation.

The association has encouraged members to lobby their local MPPs to pass Bill 118, which would change the Occupiers’ Liability Act to give the victim of a slip-and-fall accident 10 days to put a defendant on notice of an intent to sue. That doesn’t mean a plaintiff has only 10 days to file a statement of claim in court, notes Doug Downey, PC MPP for Barrie-Springwater-Oro-Medonte. Ontario has a two-year deadline to file a lawsuit.

Fraser says he keeps an airtight logbook to produce risk management documentation for insurance purposes. Also, he wants to ensure he has the right documentation in place to defend against a lawsuit.

Fraser hasn’t heard of any snowplow operations shutting down due to a lack of insurance, but the likelihood of new operators entering the business is slim to none, he says. “[Businesses] are paying through the nose for insurance with doubled or sometimes quadrupled insurance premiums. Nobody new is getting into the snowplowing business because they are not getting insurance — you wouldn’t think that would be the case in Canada.”