The best time to audit your contracts is before the first snowfall — not after the first claim

As the snow and ice management industry continues to face increasing litigation, rising insurance costs and heightened customer expectations, contractors can no longer afford to treat contracts as a routine administrative task. A well-drafted service agreement is often the difference between successfully defending a claim and facing costly litigation.

That was the central message of my presentation at the recent Snow & Ice Symposium, where we examined common contract weaknesses, insurance pitfalls and risk management strategies that snow professionals should evaluate before the next winter season begins. 

Risk management begins with the contract

Many contractors view risk management primarily through the lens of insurance. While insurance remains critical, effective risk management starts much earlier — during contract negotiations. The most common drivers of snow and ice management claims include:

• poor documentation;
• unclear scopes of work;
• ambiguous contract language;
• inadequate subcontractor oversight;
• improper risk transfer provisions; and
• negligent hiring or supervision claims.

In many slip-and-fall cases, the issue is not necessarily whether work was performed, but whether the contractor can prove exactly what was agreed to and what was done. 

Documentation wins cases

One of the strongest themes throughout our presentation was the importance of documentation.

Courts and insurance carriers place significant weight on records created contemporaneously with the performance of services. Weather reports, site inspection records, service logs, photographs, dispatch records and customer communications can all become critical evidence years later.

When documentation is missing, disputes ultimately become credibility contests between witnesses. Comprehensive records help establish that a contractor acted reasonably and fulfilled contractual obligations. 

Insurance review goes beyond certificates

The presentation also highlighted a common mistake: relying solely on certificates of insurance. Certificates alone rarely tell the full story.

Contractors should review insurance policies and endorsements to confirm that critical coverages exist and to identify exclusions that may significantly alter protection. Particular attention should be given to:

• snowplow operations coverage endorsements;
• additional insured endorsements;
• waivers of subrogation;
• snow and ice removal exclusions;
• designated operations exclusions; and
• subcontractor warranty endorsements.

A contractor may believe a subcontractor is properly insured only to discover after a loss that critical snow operations were excluded from coverage. 

Managing subcontractor risk

For contractors who subcontract work, insurance compliance should be an ongoing process rather than a one-time review.

Subcontract agreements should clearly define insurance requirements, and insurance documentation should be reviewed each season. Contractors should work closely with brokers to verify that subcontractors maintain appropriate coverage and that endorsements do not create unexpected coverage gaps. 

The bottom line

The ultimate takeaway from the session was simple: risk management is contract management.

Every winter season presents opportunities for claims, but many of those risks can be significantly reduced through thoughtful contract drafting, comprehensive documentation, strategic insurance planning and proper subcontractor oversight.

Even when a customer refuses to modify contract language, the negotiation process itself allows contractors to better understand the risks they are accepting and make informed business decisions. 

Want to compare your contracts?

Contractors, snow management companies, property managers, and industry professionals who would like to evaluate their current winter service agreements are encouraged to seek professional guidance before the next season begins.

Or speak with your insurance advisor to ensure your contracts and insurance program are working together to protect your business.

The best time to audit your contracts is before the first snowfall — not after the first claim.

Five contract provisions every contractor should review

Five contract sections that deserve particular attention during a winter contract audit:

1. Scope of work and level of service
The scope of work and level of service should be clearly defined to include:

LOS: Description of outcomes; service initiators (e.g., trigger depths), response times, service priorities, post-storm requirements and service controls (e.g., who has decision-making authority for starting/stopping service); site monitoring and hazard treatment; service call system.

SOW: Service areas, acceptable services, equipment requirements, staking responsibilities, services specifically excluded from the agreement

The less ambiguity and discretion left to interpretation, the lower the contractor’s exposure to claims that “more should have been done.”

2. Indemnification provisions
Hold harmless and indemnity clauses are among the most important risk-transfer tools available. Contractors should carefully review provisions requiring them to indemnify property owners or managers for claims “arising out of” or “related to” their services. Broad language can create obligations well beyond a contractor’s actual fault. Understanding exactly who is assuming responsibility for which risks is essential before signing any agreement. 

3. Force majeure clauses
Severe winter weather can create conditions that make performance dangerous or impossible. A properly drafted force majeure provision should address issues such as blizzards, extreme cold, states of emergency, material shortages and other circumstances beyond the contractor’s control. Certified weather documentation can become a critical component of defending decisions made during these events. 

4. Payment terms
Cash flow remains a significant challenge in the industry. Contracts should clearly address payment deadlines, finance charges, collection costs, attorney’s fees and the contractor’s right to suspend services for non-payment. These provisions can provide valuable leverage when payment disputes arise. 

5. Termination rights
Many contractors overlook termination language until problems develop. Whether the agreement allows termination for convenience, requires advanced notice, or permits termination only after a material breach, contractors should ensure the contract creates fair and balanced rights for both parties. 

For more information on how to properly structure contracts, download SIMA’s Standard Practice for Procuring and Planning Snow and Ice Management Services.

Nicholas J. Hubner, Esq., is a partner with Freeman Mathis & Gary LLP. For additional information regarding contract reviews, risk transfer strategies, indemnification provisions and winter litigation trends, contact him at Nicholas.Hubner@fmglaw.com or call 215-279-8077.