“We presume that’s why these same contractors are not interested in commercial auto coverage,” Bersnak relates. Since they need to have general liability coverage, they’re already frustrated with their insurance costs and don’t want them to go any higher. Or, they simply assume they’re completely covered by their general liability policy.
However, general liability policies also have their limitations. For instance, “There are some confusing exclusions in a GL policy which pertain to the loading and unloading of vehicles and trailers,” Bersnak points out.
Consider the following scenario. You’re doing some hardscaping at a residential property and park your truck in the driveway. The customer comes out to talk to the crewleader about some of the materials being used. Another crewmember drops a patio block onto the customer’s foot while unloading materials from the trailer. Should this be a commercial auto claim or general liability?
Bersnak says he’d turn it in under general liability, since the vehicle was not moving. But a strong case could be made that it should be a commercial auto claim since the accident happened in or upon the insured unit (vehicle).
If you are purchasing both general liability and commercial auto insurance from the same insurer, it probably doesn’t matter. But if you’re using two different insurance companies, you could be in for a few headaches; the two insurers could end up arguing for weeks or months over who should pay the claim.
“We had a claim several years ago that caused us a great deal of concern, and convinced me to never insure any business where we don’t provide both general liability and commercial auto,” Bersnak relates. “A pedestrian was walking down the street and stopped to help an employee lift a mower that got stuck while being backed off the trailer. When they lifted the mower, it slipped off the load ramp and fell onto the pedestrian’s foot. We paid out a bunch for that one, and it came from the auto policy because the accident technically happened on the trailer.” It took weeks for the insurers to decide which policy would respond.
DON'T FORGET YOUR TRAILERS
On the topic of trailers, this is another area that needs special consideration in regard to your commercial auto coverage. They, too, should be titled in the name of the company, because the liability for damages caused by the trailer follows the power unit (truck).
Many insurers will not include trailers used for commercial purposes on a personal auto policy. On the other hand, most insurers provide automatic liability coverage on a commercial policy for trailers under 2,000-pound GVW. If the GWV is over that amount, the trailer needs to be scheduled on the policy and a premium is charged.
“It doesn’t take much to get to that 2,000-pound limit,” Bersnak points out, “but the liability premium for the average heavy-duty tandem trailer is typically no more than $75 or $100 a year. Just make sure you list all trailers over 2,000 GVW on your commercial policy so you know you’re covered.”
One final reason Bersnak says some smaller maintenance companies resist commercial coverage is the cost of re-registering the vehicle from the individual’s name to the company name. Costs vary from state to state, but regardless, it’s not cheap. Furthermore, if the vehicle is leased or has a lien, the bank will not change the loan documents unless the loan is reworked. This, too, is expensive.
“One method is to lease your vehicle to the company,” Bersnak points out. “An attorney can draw up a simple lease agreement as long as your loan documents do not prohibit it. An attorney should be consulted for this transfer of risk.”
Landscaping is a fairly high-risk business—and it comes at a price. There is a lot to consider when it comes to insurance. There are also things you can consider that can help you save some money while still securing the commercial coverage you need.
Unless you’re in a southern market like Florida, you’re in a seasonal business. According to progressivecommercial.com, you might want to consider switching to a “Comprehensive Only” policy in your off months if you’re looking to simply park your vehicles during that time. You won’t be legal to drive, but your vehicles will have basic protection against things like vandalism, falling branches and hail.