Two words that no contractor likes to hear together, “slip and fall.” From an insurance agent’s perspective these words can also be understandably painful. Our industry events cover this topic so regularly we can all understand the fear. There are seminars on how to prevent slip and falls, seminars on how to fight slip and falls, seminars on how to create contracts to not be held liable for slip and falls, and the list goes on. So are slip and falls truly as dangerous an issue as everyone is making them out to be?
In a recent survey administered by the Snow and Ice Management Association (SIMA), they found that last year 62% of participants surveyed reported no slip and fall claims and 30% reported 1-3 claims. This can be looked at two ways. And depending on whether you are a snow and ice management contractor or an insurance company it can look very good or very bad.
From a snow and ice contractor’s perspective the above data looks positive. Over 60% of participants in the survey had no claims. A staggering 92% of participants responded that they had 3 or less claims last year! Snow and ice contractors may be questioning why so many insurance carriers are refusing to write businesses in this industry and why insurance premiums are sky rocketing.
The other way to interpret the above data is through the eyes of an insurance carrier. 62% of participants surveyed reported no claims last year. Meaning that 38% of those surveyed had slip and fall claims within the last year. Add to that the potential six figure cost of a claim and you have an insurance nightmare. The average cost of a slip and fall claim is roughly $15,000. However, claims can easily and quickly escalate to over hundreds of thousands of dollars if there are injuries are to the head, neck or back. From an insurance carrier’s perspective, they cannot justify charging a few thousand dollars in premium when there is an almost 40% chance that a claim will occur that could easily be 10 times that amount.
To better illustrate this problem let’s use a quick example:
- A few years ago a contractor who was doing around half a million in snow and ice management sales was probably paying just a couple thousand dollars in premium.
- The snow and ice exposure was likely added to an existing landscaping or excavating general liability policy.
- Then property managers started to push the slip and fall liability on to the contractors which greatly increased their liability exposure.
- The company that was only paying a couple thousand in premium had two slip and falls that totaled $50,000.
Even if the contractor has a 10 year relationship with the insurance company, the carrier is still $30,000 in the red.
As a snow and ice management contractor, the key to keeping the insurance you have or obtaining insurance at a reasonable rate will be to differentiate yourself. You along with your insurance agent need to provide in-depth details to the insurance marketplace about you safety policies and procedures. It may also be helpful to share your sub-contractor agreements and customer contracts as well. The old standard insurance submissions of loss runs, sales and payroll figures will no longer be enough. If this is the only information you and your agent are providing you are doing yourself a disservice. You need to show the insurance marketplace that you are part of the 62% not part of the 38%.