It is extremely important to review the requirements of your snow removal contract. Your insurance agent should be partnering with you to fully understand all aspects of your business and the contracts that you are signing. Using risk transfer tools, the property managers will transfer the risks of snow and ice removal to the contractor performing the work.

Most contracts will require the following coverages:

• General Liability
• Auto Liability
• Workers’ Compensation and Employer’s Liability
• Excess/Umbrella Liability

While many people are familiar with these coverages, it is important to make sure that you also have the proper wording on your policies. Following are examples of other wording that could be required by the contract you are signing.

General liability

General liability insurance can protect you from third-party claims of bodily injury or property damage as a result of business activity. Be aware of these endorsements and exclusions:

Additional insured for ongoing and completed operations endorsement. This provides coverage for a thirdparty entity in the event that you are negligent for bodily injury or property damage. Example: XYZ Snow Corp. signs a contract with ABC Plaza to perform snow removal. After a storm, a patron of ABC Plaza slips and falls on ice. A lawsuit is served to both you as the contractor and ABC Plaza as the owner of the property. Your policy will defend and pay on behalf of both you and the plaza owner. This does not give you additional limits; it is a shared limit, so be careful as to the number of additional insureds on a policy.

Waiver of subrogation endorsement. This endorsement would also favor the plaza owner. If there was partial fault by the plaza owner and the snow removal contractor, this endorsement, if required in the contract, would waive your insurance company’s rights to go after the plaza owner for their negligence. All responsibility would fall to you as the contractor.

Primary/Non-Contributory endorsement. This endorsement protects the additional insured party’s (i.e., ABC Plaza) insurance carrier from paying out first. If enforced at the time of the loss, XYZ Snow Corp.’s policy would pay first in the event of a loss, prior to any payout from ABC Plaza’s policy.

Exclusions. Read your policy carefully. Insurance carriers are carving out coverage for snow removal on their policies. Make sure that your policy does not have a snow and ice removal exclusion; or if it has a designated classifications endorsement, make sure that snow removal is a covered classification. Additionally, carriers might have a different underwriting stance on residential or commercial work. Be sure this is clear to your agent/carrier.

Auto liability

Auto liability has some of the same endorsements as general liability. There is additional insured, waiver of subrogation and primary/noncontributory endorsements that are typically required in a snow removal contract. Another coverage that might be required:

Hired and non-owned auto liability insurance. Do you hire subcontractors? What happens if they are involved in an auto accident while removing snow on your behalf? As the contractor that signed the contract, you could be held responsible. Hired and non-owned auto coverage provides liability coverage for you if you are operating a hired/rented vehicle or a vehicle not owned by your business.

Workers' compensation

Workers’ compensation is mandatory if you have employees working for you. There is no limit on a workers’ compensation policy as to the amount that could be paid for a work-related injury to an employee. A waiver of subrogation in favor of the additional insureds will generally be required as well.

Excess/Umbrella

Excess/umbrella policies might have a requirement in the contract that states it must "follow form." Follow form means that the excess policy would provide excess coverage (higher liability limits) with the same terms and conditions as the underlying liability policies (general, auto and employers’ liability).

Commercial contracts are always evolving; and more and more frequently, property management companies and owners are transferring their risks to the contractors performing the work. Be sure to understand what you are getting your company into, and the risks associated with these contracts. Have your insurance agent and your attorney review the requirements to make sure you do not leave your business exposed to an uninsured claim.

Jay Long is Director of Commercial Insurance for Gerardi Insurance in Putnam, CT. Contact him at jlong@hilbgroup.com.