Landscaping companies are a little bit like snowflakes; each one looks a lot alike, but is unique in its own way. That's why, when applying for business insurance, it's best for a contractor to work with an agent who asks a lot of good questions in order to walk the contractor through the process and guide him to the right coverages, says Ted Devine, CEO of Chicago-based insureon, and online insurance agency for small and micro businesses.
As Devine points out, insureon serves 26 major industry groups and roughly 500 individual professions, including landscaping and lawn care. "As of right now, landscaping professionals make up just over 1% of our active clients," Devine says. Nonetheless, insureon understands what the typical landscape contractor needs in the way of business insurance, and wants to make sure contractors understand themselves.
Services, clients, classifications and limits
Insurance carriers typically classify mowing, blowing, weeding and edging as "basic lawn care". So if that's all your company offers, this is how you'll be categorized. The next question is whether your clients are residential or commercial.
"For contractors who serve residential customers, typical limits for General Liability Insurance are $300,000 per occurrence and $600,000 aggregate," Devine explains. "For contractors with commercial customers, the individual customer usually has a contract with insurance requirements. Common limits are $1 million per occurrence and $2 million aggregate." (NOTE: "Per occurrence" relates to an individual claim, whereas "aggregate" relates to all claims during the life of the policy, which is typically one year.)
General Liability Insurance is also known as "slip and fall" coverage. "It covers third-party injuries and property damage," Devine adds. "For example, if a landscaper mowed over and damaged a client's in-ground sprinkler system and the client sued for replacement costs, the General Liability policy could cover all costs related to the lawsuit, including any settlement or judgment the landscaper is responsible for."
So, what if you're a company that also offers installation and hardscaping services in addition to mowing, weeding, edging and blowing? "These services—which include planting, mulching, irrigation, and trimming of trees from ground level—are classified as 'landscaping,'" Devine says. "This also includes snow removal, masonry, land grading and excavation work."
Despite the different classification, the basic General Liability needs would be the same. "Regardless, it's important to tell your insurance agent about all of the services you provide so you can be classified properly," Devine is quick to point out. "The way a policy is written determines what kind of events are covered—so not having all of your services listed on your policy could mean missing out on coverage in the event of a claim."
Additionally, Devine notes, even though snow removal, masonry, excavation and land grading are all considered "landscaping" activities, insurance providers rate them separately. "For business owners, that means these services must be disclosed when applying for insurance," Devine adds.
And what about the spraying/spreading of fertilizers and pesticides? "Pesticides and fertilizers are covered under the 'landscaping' classification, as long as they are over-the-counter products," Devine explains. "Most of our carriers won't cover businesses using stronger products." So, again, be sure to discuss all of this with your agent to ensure that you have adequate coverage relative to the services you're offering and products you're using.
Ensure adequate coverage, minimized premium
"We always emphasize that it's important to talk with someone who understands landscaping businesses," Devine reminds. "That way you don't end up paying for extra insurance you don't need, and also don't end up with any gaps in your coverage."
Devine provides the following overview of what insurance carriers analyze when writing policies for lawn care and landscaping businesses.
Estimated annual receipts (aka revenue). Policies are usually based on how much money a business makes because that's the amount it can lose if something goes wrong.
- The estimated payroll, or number of field employees, is especially important with respect to workers' compensation policies.
- If a business uses subcontractors, a whole host of liability issues emerge. Insurance carriers typically require the following items to be in place:
- Subcontractors must carry at least $1 million in liability insurance.
- Your business must be named as an additional insured to your subs' policies.
- Your subs must sign a hold harmless agreement in favor of your business.
- You must have a written contract between you and your subcontractors.
This gives you an idea of some of the many things to consider when buying insurance to protect your lawn care or landscaping business. Make sure you work with an agent who understands your business—and is willing to take the time to get to know it even better in order to ensure you have the right coverages in place.