Good news for snow removal contractors – winter is coming, and it’s going to be a big one. This past February, the City of Toronto experienced a 185% increase in snow and ice-related complaints compared to last year due to the Arctic polar vortex. It isn’t just Toronto, following last winter’s freezing temperatures and increases in snowfall, several municipalities across the country are proactively planning ice and snow removal tactics for the upcoming winter.
For snow removal contractors, this means more business. However, more snow and ice also means more risk. Due to the nature of the business, snow removal is an extremely high-risk trade for liability lawsuits. Now more than ever, snow removal insurance is critical for the survival of your business.
What is Snow Removal Insurance and What Does It Cover?
Snow removal insurance is a policy package specially designed to protect snow removal contractors against common risks associated with their professional activities, such as slip-and-fall injuries or property damage.
Whether you are a landscaper who offers snow services in the winter, or snow and ice removal is your primary source of income, snow removal insurance is a critical component of your risk management strategy. Following an incident, there is a two-year window where a claim could be filed against you. This means that even if you are no longer operating, you still need coverage.
A comprehensive snow removal insurance package begins with Commercial General Liability (CGL) insurance. CGL is the insurance policy you are probably the most familiar with, as it provides coverage for the liability issues most common to your business – bodily injury or property damage.
For example, a client slips on a patch of ice your team was responsible for clearing in a commercial parking lot, breaks their wrist, and decides to sue. Or, when clearing snow off of a residential street, you accidentally drive over someone’s lawn, causing significant property damage, which leads the homeowner to sue your business.
Should you be found responsible in scenarios such as these, commercial general liability insurance would cover the associated legal expenses, medical fees, and repair expenses. Even if you are not found responsible, the cost of a lawsuit can be astronomically high.
Additional Coverage For Your Snow Removal Business
Insurance is not one-size-fits-all, and depending on the location and size of your business, you may have different risks. Speak with your broker about customizing your insurance coverage to meet your specific business needs by adding additional policies, such as:
- Equipment and Tools Coverage provides coverage for equipment and their accessories, the property of others in your care, and portable business tools from loss or damage, including theft. Anything valued at less than $1,500.00 is considered a tool, while anything above is considered to be equipment.
- Equipment Breakdown Insurance is another form of coverage that protects your equipment. This policy covers the cost to replace or repair your equipment should it breakdown due to an electrical or mechanical issue, such as a snowplow that breaks down due to a blown hose.
- Hired and Non-owned Vehicle Coverage: A type of coverage designed to protect vehicles used in connection with your business that you don’t own, rent, lease, or borrow. For example, an employee uses their truck for business purposes and crashes it on a job site after losing control on some black ice. This type of coverage could cover the costs associated with repairing the truck.
- Legal Expense Insurance: Should a lawsuit be brought against you, this type of coverage gives you access to unlimited general legal advice on any legal issue with an experienced lawyer. This insurance also covers your business for certain legal expenses incurred while going through the legal process.
How Much Does Snow Removal Insurance Cost?
The cost of insurance for snow removal contractors is high when compared to other construction trades, due to the high-risk nature. When determining the price of your insurance premium, several factors are taken into consideration:
- Location: The location of your business is a significant determining factor for cost, as the amount of snowfall is tied directly to the amount of business and revenue you bring in. For example, a snow removal contractor can expect more business in a snowy city like St. John’s, where it snows an average of 79 days a year, as opposed to Vancouver, where it snows an average of eight (source).
- Years of Experience: How much experience you have removing snow and clearing ice may be contributing to how much risk you are exposed to. For example, someone who has been in the business for one season is more likely to make mistakes than someone who has been in the industry for twenty-five.
- Business Size: The more employees you have, the higher your exposure to risk is. It is important to note that your policy coverage limit typically applies to all employees of your business, not each employee. One option to accommodate all of your employees is to increase your limit. However, hiring subcontractors that carry their own liability insurance ensures all parties have adequate coverage.
- Annual Revenue: Your annual gross revenue is used to determine the total amount your insurance company should insure. It is assumed that more income means more business, which means more risk. It also means you have more at stake financially should you be sued.
For a low-risk, snow removal company (e.g., small scale side business in an area where it rarely snows), you can expect to pay $650 for a general liability insurance policy with a $1M limit. As the level of risk rises, so too does the cost of your premium.
Sudden snowstorms, ice storms, and blizzards are all too familiar for Canadians, who rely heavily on snow removal contractors to make the roads safe. Make sure you can be there when they need you. Running a business can be stressful, but your snow removal insurance doesn’t have to be.
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