The market for General Liability for snow plowers can be summed up in a single word—rough. Talk to anyone who’s been placing any volume of snow plowers recently, and I’m sure you’ll hear the same story—there simply aren’t enough carriers willing to take the risk. As the number has continued to dwindle, we’ve seen carriers come and go—leaving and then dipping their toes back into the market, only to stop writing the class again just a year or two later. Among the carriers still writing the class, premiums have been increasing at an alarming rate.
How Did We Get Here?
I’m often asked why snow plowing premiums are so high, even for small snow removal contractors.
The short answer is that awards on the claims—mostly slip and fall—have been steadily on the rise. In part, this trend derives directly from the medical expenses that can accumulate after an injury. With healthcare expenses having increased significantly over the past decade, injury-related claims have skyrocketed and premiums have followed suit.
Another contributing factor is how these losses are being handled. The insurers are rarely taking these claims to court because the costs involved can be staggering compared to the actual indemnity of the claim. In the Northeast, for the most part, carriers have not found juries to be sympathetic toward insurance companies. As a result, claim settlements have become the norm.
Finally, for years this class of business had been severely underpriced. Snow removal losses (like many 3rd-party claims) can take years before they’re even reported, which delays the loss from hitting the insurer’s books. Then the adjustment of these losses often takes quite a while—sometimes years—with reserves increasing as the claim progresses. Before the carrier knows it, their book of business that was once running very well for a few years can suddenly spike to a well-over 100% loss ratio. They react by taking drastic action—typically significantly increasing rates or discontinuing writing the class altogether.
Typically, the most difficult are high-volume retail and transit hub exposures, which see the highest loss frequency, and nursing homes, assisted living facilities and hospitals, which can see the highest severity. For obvious reasons, plowing of airport runways is very difficult to cover as well. There are markets that will write all of these exposures, but you can expect to see minimum premiums starting at $25,000 and easily climbing in excess of $100,000 for the toughest risks.
In general, snow removal at the following is more difficult to place:
- Convenience Stores and Gas Stations with Convenience Stores, especially 24-hour locations
- Pharmacies, Hardware Stores, Big Box Stores, Large Grocery Stores
- Banks with Walkup ATMs
- Hospitals, Nursing Homes/Assisted Living Facilities, Surgical Centers
- Stadiums, Airports
- Public Roads, Railroads, Subway Locations
By location, snow and/or ice removal operations in Philadelphia and the five boroughs of New York (Manhattan, Brooklyn, Queens, The Bronx and Staten Island) are difficult to cover.
Contractors who remove snow and ice from roofs, or who are involved in avalanche-control operations are also hard to place.
Eye on the Future
A couple of states (Colorado & Illinois) have passed legislation that essentially voids certain indemnity agreements that have become common in snow removal contracts. There are bills before lawmakers in New Jersey, New York, Pennsylvania, Indiana, Massachusetts & Connecticut seeking similar legislation.
A June 21, 2018 article on The National Law Review’s website describes Colorado’s “Snow Removal Service Liability Limitation Act” as follows:
By its terms, the Colorado Act applies to contracts for the following services: (1) plowing, shoveling, or other removal of snow or other mixed precipitation from a surface; (2) deicing services; and (3) a service incidental to either (1) or (2), including operating or otherwise moving equipment or materials used for snow removal or deicing services. The Act makes any effort to require indemnification for one’s own negligence in such contracts void as against public policy.
Specifically, the following types of provisions will no longer be enforceable:
- An agreement by a service provider (snow removal contractor) to indemnify a service receiver (typically a property owner or property management company) from the service receiver’s own acts or omissions.
- An agreement by a service receiver to indemnify a service provider from the service provider’s own acts or omissions.
- An agreement by a service provider to hold harmless a service receiver from any tort claim arising from the service receiver’s own acts or omissions.
- An agreement by a service receiver to hold harmless a service provider from any tort claim arising from the service provider’s own acts or omissions.
- An agreement by a service provider to defend a service receiver from any tort claim arising from the service receiver’s own acts or omissions.
- An agreement by a service receiver to defend a service provider from any tort claim arising from the service provider’s own acts or omissions.
The new legislation, however, does not apply to contracts for services on public roads, at public utilities, or at public or other commercial airports. It also does not apply to “an insurance policy, a surety bond, or workers’ compensation.”
The full article, which includes information about the anticipated effect of the act and the effect of the act on additional insured obligations, is available here.
Getting Your Client the Best Deal
For one, start the submission/quoting process early. The best time to begin looking for coverage for a snow plower has actually passed by the time you are reading this article in the fall (but keep that in mind for next year). Most markets have trouble handling the volume of submissions they receive on this class in the fall and early winter, and quote times can sometimes increase dramatically once the weather gets colder and the submission flow picks up. Capacity can also become an issue as winter approaches, because some carriers will stop writing once they hit their magic number in terms of snow plowing premium.
All this in mind, it’s not surprising that it’s becoming more common to have snow plowing policy terms that begin in August or September. This can be a good tactic for two reasons: it’s generally when the traditional landscaper/snow plower has decent cash flow; and it forces the underwriting process to begin (and end) outside of the busy season for snow plowers.
To get your submission to the top of the pile, here are a few items that most underwriters will be looking for:
- A fully completed ACORD application & snow plowing supplement
- 3-5 Years of currently valued loss runs (some carriers are even asking for 7 years)
- Detailed Information on what, exactly, is being plowed – including addresses
- Copies of the insured’s contracts with their customers
The 2020 edition of the Farmers' Almanac predicts that two-thirds of the country will face a colder-than-normal winter season. The worst of this year's bitterly cold winter will affect the eastern parts of the Rockies all the way to the Appalachians. The outlook says the Northeast, including cities such as Boston and Washington, can anticipate colder temperatures than typically expected. The biggest drop will happen in areas across the northern Plains to the Great Lakes.
"With colder-than-normal temperatures in the Northeast and above-normal precipitation expected, our outlook forewarns of not only a good amount of snow, but also a wintry mix of rain, sleet—especially along the coast," the long range forecast suggests. People in the western third of the US may be in luck, since the publication forecasts near-normal winter temperatures there.
They are calling it a ‘Polar Coaster’ and RPS is here to help you weather the storm with snow plowers coverage this season!