To quote the popular TV drama series, “Game of Thrones,” – Winter is Coming! Not only is it already here, it’s come with a vengeance! With plenty of snow comes the need to have it removed from driveways and parking lots. This article will explore some of the insurance challenges, and opportunities, available to occupiers of commercial property who engage the services of a contractor to handle all of that fluffy, slippery snow.
As the prudent owner or tenant of a commercial property, you have a duty to ensure that visitors to your premises are kept safe from injury. In the winter, this means clearing snow and ice from your property to prevent people from hurting themselves in a slip and fall (probably the most common source of claims under a commercial general liability policy). Hiring a professional contractor to remove the snow and ice from your property is not just a practical exercise but it is also an excellent way to transfer the slip and fall risk to another. A well-drafted contract will include an indemnification clause in favour of the property owner as well as the requirement for the contractor to carry adequate insurance. I recommend consulting a Lawyer to ensure that the contract is properly written, which is essentially a one-time cost as the same contract can be used in future years.
Part of your contractor selection process should include a review of their insurance program, which should occur before the contract is executed. You will want to ensure that the prospective contractor has all of the coverage that is required under the terms of the contract. Most commonly this will mean reviewing a certificate of insurance issued on behalf of the contractor by their insurance broker. You can undertake this review on your own, or you can send it to your own insurance broker to have them look it over (recommended). In addition to the certificate of insurance, you will also want to provide your broker with a copy of the contract itself.
Professional snow removal contractors will have the following insurance coverage options:
- Commercial General Liability Insurance: will respond to bodily injury claims resulting from a slip and fall. At a minimum, the policy should include: Non-Owned Automobile Liability; Occurrence Based Coverage; Contractual Liability; Cross Liability and Severability of interests’ clauses; Owners and Contractors Protective; Tenants Legal Liability and Employers Liability. You should be added to this policy as an “additional insured” and provided with a minimum of 30 days prior written notice of any cancellation, non-renewal, or material reduction in coverage.
- Commercial Automobile Liability Insurance: presuming the contractor won’t be removing the snow by hand they will likely be using one or more licensed vehicles. This policy will address bodily injury and property damage claims relating to the use and operation of a motor vehicle.
- All Risks Contractors equipment insurance: this property policy will provide the contractor with protection should their equipment be damaged or stolen. By ensuring that the contractor is properly covered you have some level of assurance that they will be able to fulfill the terms of your agreement. You should ask that the policy includes a “waiver of subrogation” in your favour, which means that the contractor’s insurer won’t be able to come after YOU to recover monies they payout in a claim.
When reviewing the contractor’s certificate of insurance here are some things to consider:
- The cancellation agreement should not include the words “endeavor to.” When those words appear in a certificate of insurance they greatly reduce the efficacy of the cancellation clause.
- Consider asking to have the certificate signed by the insurance underwriter as opposed to the contractor’s broker. By doing so you gain confidence that all of the coverage appearing on the certificate is indeed included in the insurance policy.
- Make sure that EVERYTHING requested in the contract appears in the certificate.
- The certificate holder (i.e. you) will receive a minimum of 30 days prior written notice of any cancellation, non-renewal, or material reduction in coverage.
As a property occupier, you have a duty to keep guests and invitees safe from harm and any breach of that duty can have disastrous financial consequences for your business. By relying on a professional, adequately insured contractor you can greatly diminish this exposure. Also, your own insurance program will be insulated from claims, meaning that your premiums will remain competitive and your insurer will continue to support you.