You’re driving down the road one evening after a long day’s work. What appears to be an alien spacecraft or perhaps just a shooting star captures your attention. Momentarily captivated, you veer onto the shoulder and end up in the ditch, inflicting some front-end damage to your car. Thankfully, you’re not hurt. But your insurance company denies your claim because your intention was to be driving on that road where the accident took place.
Seem odd? It should.
Now think about your lawn care business. You believe that you’ve obtained the necessary liability insurance to cover any accidents that may happen. One sunny spring morning, one of your employees accidentally loads a non-selective herbicide into the tank on his truck. He proceeds to work through his route that day, unknowingly killing one lawn after another. It’s going to cost you thousands of dollars to repair or replace all of those lawns. If you don’t, the customer backlash will probably put you out of business.
Thankfully you have the herbicide pesticide applicator endorsement, which will pay for all of those lawn replacements. Or will it?
Jim DeMeester of DeMeester’s Lawn Care in Freeport, IL, is going to find out the answer to that question in early April. A few years ago, one of his employees accidentally grabbed a jug of Roundup when he’d meant to grab a jug of SpeedZone selective herbicide. The employee proceeded to ruin more than two-dozen lawns that day. DeMeester’s insurance company, Hortica Insurance & Employee Benefits, denied the claim. A judge will now determine, on April 5, if the case should be tried or not.
DeMeester feels pretty good that it will, even though there are a couple of precedents suggesting that it won’t. Brake Landscaping in Missouri and Looking Good Lawns in Michigan had similar cases in recent years. In both instances, the courts ruled that the insurance policies provided adequate provisions for, in laymen’s terms, property that the contractor was directly working on, i.e. the lawn he was sent there to treat. Additionally, provisions existed for any property that needed to be repaired or replaced as a result of work being incorrectly performed, i.e. spraying the wrong product.
TIP #1 – Grill your agent!! Ask your insurance agent to specifically tell you, in writing, what is and is not covered in your policy. In fact, since insurance companies often like to talk in legalize and baffle you with bull butter, pose this very specific scenario to him or her and ask if you’d be covered. If not, you need to discuss your options.
Here’s why. In some states, such as Illinois which has something called the Illinois Pesticide Act, commercial pesticide applicators must obtain necessary licensing. Part of obtaining a license is proving that you have the necessary insurance (see attached image of section 10, 3-A and 3B of the Illinois Pesticide Act) to protect people from injury and/or property damage. If you provide proof of coverage, but there are major gaps in that coverage, there’s going to be trouble.
Similarly, in Ohio, the Ohio Insurance Agents Association recently reminded members that certain policy exclusions create problems for not only the applicator, but also the insurance agent. The memo stated: “It is the agent's responsibility to verify with the insurance company issuing the policy that the policy and/or endorsements attached to it provide liability coverage that complies with OAC requirements for pesticide applicators. That means pesticide applicators must have coverage for pollutants they bring on to the worksite and for the application of the pesticides on location. There has been at least one claim in Ohio where a carrier denied coverage on a large claim based on the ‘your work’ exclusion.
Now back to Illinois and the Jim DeMeester case. Unlike the unsuccessful cases brought forth by Brake Landscaping in Missouri and Looking Good Lawns in Michigan, DeMeester says he’s taking a slightly different approach that stands a much better chance of succeeding. “We’re also suing the insurance agent, not just the insurance company,” DeMeester says.
Citing the Illinois Pesticide Act, DeMeester says he was able to renew his pesticide applicator’s license because the Illinois Department of Agriculture concluded that he had adequate insurance coverage. Any gaps in his coverage should have been identified, disclosed and addressed by his insurance agent.
As stated earlier, a judge will determine on April 5 if DeMeester and his lawyer are onto something, or if the case should be dismissed. Regardless of what is decided in court, DeMeester has learned some valuable lessons from all of this—and perhaps you can too.