Happy Thanksgiving

On behalf of everybody here at BearWise Landscapers and Black Bear Insurance Agency, we would like to wish you a Happy Thanksgiving. We have a lot to be thankful for over this past year and we look forward to serving your landscaping business over the upcoming years.

The First Thanksgiving

The principle of indemnity is one of the three main legal principles that apply to almost all insurance policies. Insurance policies are designed to transfer the risk exposures an entity faces to an insurance carrier. The principle of indemnity governs these contracts by not allowing an insured’s proceeds to exceed its financial losses from an insured event. Insurance pays the actual value of the loss and should not allow an insured to gain more than what was lost.

The principle of indemnity also requires that insureds have an insurable interest in the subject of the insurance policy. To have an insurable interest, the entity must suffer a financial loss if an insured event were to occur.

The principle of indemnity is the reason that insureds cannot have duplicate coverage. Almost all insurance policies have ‘other insurance’ clauses that limit or deny coverage for an otherwise covered loss if it is covered by another policy.

If you have any questions about the principle of indemnity and how it applies to the insurance policies or claims of your landscaping business, please fell free to contact one of our licensed insurance agents.

In an insurance contract, the principle of equity requires that both parties deal fairly with one another. Insurance is a highly regulated industry and there are certain ways in which an insurance carrier must deal with insureds. Insurance carriers are not allowed to take undue advantage of insured’s lack of information or bargaining power due to the doctrine of unconscionable advantage. They must also follow the doctrine of reasonable expectations in which they should not mislead insureds as to the coverage given under a particular policy.

Another aspect of the principle of equity is that most insurance policies are contracts of adhesion. This means that the policy is a contract to which one party must adhere as written by the other party. Most insureds do not participate in creating the wording of their insurance policies; therefore courts will rule that any ambiguity in the insurance contract will have its meaning applied most favorably for the insured.

A final import note about the principle of equity is that most insurance policies are conditional contracts. This means that it is a contract under which performance is only required under certain conditions. The insurance carrier does not have to pay claims unless the insured performs the contractual conditions. In most policies, this includes prompt reporting of claims, cooperation with investigations of the claim, and providing sufficient information for the insurance carrier to settle the claim.

If you have any questions about the principle of equity and how it affects your landscaping business, please feel free to contact any of our licensed insurance agents.

The principle of disclosure is one of the three main legal principles that apply to almost all insurance policies. Insurance policies are a contract between the insured entity and the insurance carrier, and they are considered to be contracts of utmost good faith.

Utmost good faith states that both parties in an insurance contract are obligated to act in complete honesty and to disclose all relevant facts. This is fundamental to the principle of disclosure, which adds that every insurance applicant has a duty to disclose to the insurer and its legal agents all material information. Material information is information that could reasonably affect the insurer’s underwriting decisions about whether and on what terms to ensure the applicant.

Concealment and misrepresentation occur when material information is not given to the insurance carrier or it is incorrect. An insurer can deny coverage for an insurance claim at the time of loss if it can demonstrate to the court that the insured committed either of these two offenses. In addition to the denial of a claim, it is a third degree felony in Florida to knowingly mislead an insurance carrier in an insurance application.

On our online quote form, we included a statement about the principle of disclosure to make online applicants aware of the importance to reveal truthful information to us in the application process. If you have any questions regarding this principle, please feel free to contact one of our licensed insurance agents.

Trust is essential in an insurance contract because the insured is purchasing a document that guarantees future action of the insurance carrier in the possible event of a claim. The insurance carrier is also trusting the information provided to them by the insured. As insurance agents, we take your trust very seriously and look forward to earning it through integrity.

Insurance policies are contracts between the insured business and the insurance carrier. As contracts, they are subject to the same laws that govern all contracts in the United States and in the state in which they are issued. They are required to have a legal purpose, and offer and acceptance, an exchange of valuable consideration, and legally competent parties. All of these requirements must be met in order for an insurance contract to be legally binding.

As a landscaper, insurance plays an important role in your business and gives you the security that your business can handle the risk exposures it faces. It is important to understand the legal principles behind insurance policies to know the strengths and limitations of the coverage provided by these contracts.

Most insurance policies are subject to the following three legal principles:

• 1. The Principle of Disclosure
• 2. The Principle of Equity
• 3. The Principle of Indemnity

Please select the links for each of these principles to learn more about how they affect your landscaping business. If you have any questions about your current insurance policies or general insurance concepts, please do not hesitate to contact one of our licensed insurance professionals. At BearWise Landscapers, we understand the important role insurance can and should have in the success of your landscaping business, and we want to provide you with the information to make informed business decisions regarding your insurance program.

Two different forms may be offered under a crime policy. One form is for employee dishonesty and the other form is for employee theft. Both forms sound very similar, but the wording is very important for understanding what that coverage includes and also what that coverage potentially could exclude.

Employee dishonesty coverage is insurance against loss of money, securities, or other property because of an employee’s dishonest act committed with manifest intent to cause a loss to the insured and to obtain a financial benefit for the employee or another person or organization that the employee wants to receive the benefit.

The policy provisions state that the employee must act dishonestly, but the form does not define “dishonest acts”. This leaves a broad interpretation including “lying”, “cheating”, “deceiving”, and “stealing”. Employee theft coverage is much more precise and includes coverage specifically for acts of employee theft.

The employee dishonesty form requires the employee to act with manifest intent to do both of the following:

• - Cause a loss to the insured
• - Obtain financial benefit for the employee or for a person or entity that the employee chooses to receive the benefit.

Employee theft coverage does not include manifest intent. Therefore the insured does not have to prove that the employee intended to cause a loss to the insured and obtain financial benefit for the employee or another person or entity.

Under the employee dishonesty form, the financial benefit that the dishonest employee seeks to gain must be something “other than employee benefits earned in the normal course of employment, including: salaries, commissions, fees, bonuses, promotions, awards, profit sharing, or pensions.” Some employee dishonesty insurers pay claims involving fraudulent salaries, while other insurers deny coverage.

Employee theft coverage does not include the financial benefit exclusion, therefore, it covers claims as long as the employee’s taking of additional salary or other employee benefits constitutes an unlawful act.

Both coverages are limited to covering the loss of money, securities, and other tangible property only. Neither form provides coverage for indirect losses such as loss of income or business opportunities. It is important to understand the difference between the two forms to know which coverage works best for your business exposures.

Many commercial property and equipment floater policies have a coinsurance condition. This is used by these insurance carriers to create accurate rates by making an incentive for policy holders to insure the property for the correct amount. It is important to understand how the coinsurance condition works and know what it is on your policies.

The coinsurance condition requires the insured to carry insurance equal to a specified percentage of the actual cash value or replacement cost value of the covered property. As long as this condition is fulfilled, the insured will be paid in full for any covered losses up to the limit of insurance. However, if the coinsurance condition is not fulfilled then the loss payments will be reduced proportionately. The following formula calculates the loss payment amount:

Loss Payment = [Amount of insurance carried / Amount of insurance required] x Loss

For example:

ACV of Building/Equipment is $100,000
Limit of Insurance is $60,000
Coinsurance Percentage is 80%
Amount of loss is $40,000
Amount of insurance required is 80% x $100,000 (ACV of Building/Equipment)

Loss Payment = [60,000 / 80,000] x 40,000 = $30,000 (minus any deductible)

As you can see from this example; fulfilling the coinsurance condition is very important for minimizing risk and exposure. To receive full payment for the loss the building or equipment has to be covered for at least $80,000. Since the limit is only $60,000 your loss payment will be reduced proportionately. That is why in this example only $30,000 is recovered on a loss valued at $40,000.

Please review your current policies to find out the coinsurance percentage on your policy. These can range from 60 to 125 percent. It is important to insure the property for the full value and use the coinsurance clause as a buffer for inflation, changes in building costs, bad appraisals, and other things that could arise. This will help avoid any coinsurance penalties that could result in a claim situation. We would like the opportunity to review your current policies and offer comparative commercial property or equipment floater quotes.

Florida issued the new workers’ compensation rates for 2009, which gave businesses an average rate decrease of 18.6 percent. The new rates will be used on all policies issued after January 1st, 2009. For Florida landscaping business, the 2009 rates were also lower than the 2008 rates, making it the fifth straight decrease with a total premium savings of over 60% from the workers’ compensation rates in 2004. Below are the applicable workers comp classifications for landscapers and their corresponding 2009 rates:

• 0042 - This classification code is applied to businesses that are primarily engaged in installing landscapes. The classification includes planning, clearing, grading and planting necessary for landscaping operations. It also includes the installation of sod. The clearing and grading done by these insureds is of the fine type necessary for finishing operations and does not result in changes to the contour of the land. This classification cannot be used in Florida along with the class code 9102 unless the operations are conducted by separate work crews. Please contact our office for more information regarding the use of both classification codes on the same policy. The Florida rate for this classification in 2008 was 8.70 and in 2009 it is now 7.11 dollars for every 100 dollars of remuneration.
• 9102 - This classification code is assigned to insureds engaged in the lawn maintenance business. Code 9102 is also applied to all employees engaged in the operation of public parks. For landscapers, the essential difference between the application of Code 0042 and Code 9102 is that Code 0042 applies to work involving new landscaping installations whereas Code 9102 applies to work involving the maintenance of existing landscaping and/or lawn maintenance. Insureds that perform maintenance of lawns, grounds, and gardens include work that may involve lawn mowing, raking, application of liquid or granular fertilizer, spraying and trimming of shrubs or small trees from the ground, and thatching or aerating. The Florida rate for this classification in 2008 was 4.86 and in 2009 it is now 4.20 dollars for every 100 dollars of remuneration.
• 0106 - This classification code is applied to employees and businesses that prune and trim trees from above the ground. This code is applicable by job site to tree pruning contracts requiring any above-ground level work and it also applies to the whole contract including, but not limited to, chipping and cleanup activities regardless of whether or not a separate contract is written for tree pruning or lawn maintenance and another contract is written for chipping or cleanup. Incidental tree removal on a developed site conducted in connection with tree pruning, spraying, and repairing operations is also assigned to Code 0106. This classification includes risks contracting exclusively to remove immediate tree hazards due to natural catastrophes. Tree hazard cleanup may involve removing dead trees; trees or branches that are leaning on trees, power lines, or other structures; trees with broken or cracked stems; or large, dead or broken limbs that are still attached to a tree. The Florida rate for this classification in 2008 was 15.96 and in 2009 it is now 12.95 dollars for every 100 dollars of remuneration.
• 5183 - This classification code is applied to employees and businesses that are engaged in plumbing work that is otherwise unclassified by the Basic Manual. For landscapers, this code is used for installation of underground lawn sprinkler systems. Trenching work performed by the same contractor engaged in the installation of underground pipes for sprinkler systems is assigned to this classification since trenching work is an integral part of the underground sprinkler installation work. Such operations may be performed using either a vibrating plow or a pipe pulling machine, which knives the ground to a depth of 12 to 18 inches and to a width comparable to that of the piping being used. The piping is then automatically inserted into the ground. The Florida rate for this classification in 2008 was 6.75 and in 2009 it is now 5.14 dollars for every 100 dollars of remuneration.

The employees and operations of most landscaping businesses are classified into the codes listed above. Depending on the nature of work performed, other classification codes may apply to the business. Code 8810 (2009 rate: 0.28) is used for employees that only do clerical work and 8742 (2009 rate: 0.49) is used for those employees that only have sales duties. If you would like more information about these classifications or information on how your own employees should be classified, please do not hesitate to contact our office or request a workers’ compensation quote online.

*These rates may not last all year, as there have been discussions towards new rates due to a recent workers’ compensation court case that will allow larger lawyer fees in the claim handling process. We will keep you updated on any changes.

Recently, I posted an article discussing the Business Auto Coverage Form and some of its specific details. The article mentioned how the Business Auto Coverage Form allowed for different autos to have different coverages. These differences are noted on the policy by different auto symbols.

There are ten different auto symbols:

• Symbol 1 - Any “Auto” is covered.
• Symbol 2 - Owned “Autos” Only covers all autos you own and also liability for non-owned trailers attached to owned power units.
• Symbol 3 - Owned Private Passenger “Autos” Only covers only the private passenger autos you own or acquire ownership after the policy begins.
• Symbol 4 - Owned “Autos” Other Than Private Passenger “Autos” Only covers all the owned “autos” that are not of the private passenger type and the liability coverage for any non-owned trailers attached to owned “autos”.
• Symbol 5 - Owned “Autos” Subject to No-Fault covers only the “autos” you own that are required to have No-Fault benefits in the state where they are licensed or principally garaged.
• Symbol 6 - Owned “Autos” Subject to a Compulsory Uninsured Motorists Law covers only those “autos” you own that because of state law require you to have and cannot reject Uninsured Motorists Coverage.
• Symbol 7 - Specifically Described “Autos” covers only those “autos” mentioned in Item Three of the Declarations page on your policy.
• Symbol 8 - Hired “Autos” Only is coverage for only those “autos” you lease, hire, rent, or borrow from any of your employees, partners, or members of their households.
• Symbol 9 - Non-Owned “Autos” Only covers only those “autos” you do not own, lease, hire, rent, or borrow that are used in connection with your business. This includes “autos” owned by your employees, partners, members, or members of their households but only while used in your business or your personal affairs.
• Symbol 19- Mobile Equipment Subject to Compulsory or Financial Responsibility or Other Motor Vehicle Insurance Law Only covers only those “autos” that are land vehicles and that would qualify under the definition of “mobile equipment” under this policy if they were not subject to a compulsory or financial responsibility law or other motor vehicle insurance law where they are licensed or principally garaged.

I was reading an article the other day in the Planet News, the Professional Landcare Network publication. The article was highlighting a landscape and lawn care owner who installed real time GPS units his four work trucks. With the ability to watch where each of his trucks were and how long they have been there; he was really able to cut down on idle time at the job sites. He mentioned that idle times had decreased about 30 to 40 minutes a day per crew.

Another great feature to these units is whenever someone is driving over the speed limit a message is instantly sent to the owners cell phone. This will help ensure that your drivers are being safe drivers, which will minimize the risk of auto claims. Less claims generally means lower premiums over time. Larger companies can see some significant savings by minimizing their claims.

There are several different products out there, so you may want to research which would fit best with your company. However, this could be a very valuable tool for improving efficiencies, minimizing claims, and increasing your bottom line.