by Darla Renk, Joseph D. Walters Insurance, www.JosephDWalters.com.
We hope that you, your staff, and your families are all safe and healthy. The world has turned upside down and we are all trying to just get by or to make the best of this tragic situation. This time of year, you would normally be gearing up for the start of a new cleaning season. We know you are anxious to get back to work.
Some of you have taken advantage of this downtime to revamp your marketing plans, to set up future jobs, or to get a lot of your paperwork out of the way. Others have stepped up and volunteered to help mitigate this crisis. We have been overwhelmed by some of the stories we are reading about contractors volunteering to help disinfect and sanitize playground equipment, shopping carts, or other public spaces. Kudos to all of you who are out there making a difference.
As a person, a mom, a consumer, a citizen, I am glad to know that people like you are out there trying to help keep me and my family safe. As a longtime friend of the mobile cleaning industry, I feel a sense of pride that my friends are so kind and charitable. But as an insurance agent, it is my job to tell you that some of your ideas, while generous and admirable, may not be a great path for your business to take.
Have you heard the phrase “No good deed goes unpunished?” I am afraid that may end up true for some of you as a result of your altruism.
There are serious, insurance-related concerns related to some of the activities we are seeing mentioned on the message boards and industry chat rooms. The most basic piece of advice I can give you is this:
Before making any changes to your operations, your website, your business, please contact your insurance agent, and discuss the implications or problems you could face. Your Account Manager will be able to advise you whether your new services qualify for coverage in our special program, or if you need additional protection to cover the new exposures.
What Are Your Insurance Policy Exclusions?
Every insurance policy includes built-in exclusions that negate coverage for certain types of losses, or for losses occurring from certain types of operations. Ask your insurance agent to review with you the exclusions in your policy. It is important to know when your policy will not respond.
Here are some examples:
- Pollution Incidents: Most General Liability policies exclude coverage for pollution incidents. This means there would be no coverage for bodily injury or property damage arising out of actual, alleged, or threatened discharge, dispersal, seepage, migration, release or escape of pollutants. There are some exceptions to this exclusion, but for most situations, you would not be covered for the introduction of a “pollutant” into an environment where you are working. Pollutant is defined as “any solid, liquid, gaseous or thermal irritant or contaminant, including” . . .chemicals.While our policy often includes an amendment to the pollution exclusion giving 72 hours of coverage for pollution events, the type of exposure your work creates may not be detectable immediately. For example, your chemicals will seep into the ground around playground equipment you clean. When the quarantine is lifted and children once again can play outside at the park, you could be faced with claims if those chemicals are alleged to cause bodily injury or property damage to someone using the jungle gym or swings.
Purchasing pollution liability coverage may be warranted for any outdoor cleaning exposure, but the need for it may be greater for certain types of jobs or if you are using stronger solutions than before. You should discuss with your agent any new jobs you are considering taking for analysis of your need for this coverage.
- Overspray exclusion. In addition to the built-in exclusions, your insurance company may have added restrictions that narrow the eligibility for certain types of losses. For instance, most insurance policies for power washers will include an overspray exclusion, meaning claims arising from overspray would not be covered. This would be of particular concern for anyone considering using a fogger for disinfectants, a suggestion we have seen quite a bit lately on the message boards.
Our policy does not exclude coverage for overspray exposures. Over the past 40 years, we have negotiated with our insurance carriers to build the best possible set of coverages for this industry. Our insistence on the insurance company’s removal of the overspray exclusion required our agreeing to the addition of underwriting restrictions, i.e. the 3-story height max, to limit the insurance company’s exposure for these types of claims.
Since the COVID circumstances are new to everyone, we do not know how your insurance policy would respond to an overspray claim while doing a new version of your cleaning operations.
Even if you are using green, environmentally safe solutions, they are likely to sting if they get in someone’s eyes. Restricting the height where work can take place reduces the unknowns in the overspray area, because it reduces the size of the overspray area. In most cases, your overspray is now limited to the immediate vicinity of your jobsite which, hopefully, you have surveyed and have already developed a plan to protect any exposed property. Your diligence before, during and after the job are still your best line of defense in avoiding a loss. The use of a fogger may extend the overspray area and subject you to a broader claim exposure.
- Communicable Disease Exclusion. There is one more exclusion that may play a part in coverage during this time of crisis. Because of the uncertainty surrounding how the courts will decide cases of corona-related claims against a general liability policy, most insurance companies are adding a communicable disease exclusion to liability policies as they renew. You probably did not have this exclusion before, but it may be there on your next policy term. Insurance experts and analysts are divided about how this exclusion will affect claims going forward, but it is important to know if it is part of your policy.
How does adding a new cleaning service impact my insurance?
Another area of concern when adding new services comes from the application you completed when you purchased your insurance coverage. You were asked a series of questions designed to give the underwriters a clear picture of your business and the work you do or intend to do. Based on your answers to those questions, the underwriter decided that your business exhibited an acceptable level of risk and offered you insurance protection in exchange for the payment of premium that was calculated based on that level of risk. When you add a new service, you may be changing the level of risk the insurance company is covering. If the new risk is too great, they may decide you are no longer eligible for protection under their policy.
Failure to reveal services you offer, or intentionally offering false information on your application or in subsequent insurance reviews, subjects you to policy cancellation for misrepresentation, a form of fraud. In addition, claims will not be covered if they result from undisclosed operations that would have disqualified your application.
But how will they know? Are they going to put you under surveillance? Sort of. They will visit your website and review your social media posts. All those pieces of information you have assembled to keep your phones ringing will also be used to determine your continuing ability to purchase insurance coverage in the future, and possibly affect the payment of a claim against you. It is important to discuss your operations openly and fully with your agent, to make certain you are properly protected.
Your website should paint an accurate picture of what your company does. While a clip art photo of a guy rappelling down a skyscraper with a squeegee may have visual impact, if it is not what you do, don’t use it. If it is what you do, fully disclose it and don’t accept an insurance policy with a three–story height limitation.
Your website should also contain only factual information.
Do not publish claims that your services minimize or eliminate the spread of the coronavirus unless you can prove it scientifically.
Your website is considered an advertisement. Under the Personal and Advertising Injury section of your general liability policy, there are coverage exclusions for material published with a knowledge of falsity, and for failure to conform to statements of quality made in an advertisement. While claims that you can help stop or cure COVID-19 may be a successful marketing strategy, please forego bold claims in favor of more realistic ones.
A Final Word
We wish you much success and hope that you have as much work as you can handle. But before you decide to add something new to your professional bag of tricks, think a moment. To what new risks will you expose yourself with this new type of work? If you have any questions about adding a new service to your operations, please call your Account Manager first. We are always available to help.
ABOUT THE AUTHOR: Darla Renk is a Certified Insurance Service Representative and Account Manager for Joseph D. Walters Insurance, America’s #1 insurer of power washing contractors. To learn more and to download your free guide to power washing insurance, visit www.JosephDWalters.com.