Lawsuits for employment practices have historically increased during periods of economic recession. These lawsuits are no longer just directed at larger corporations and statistics show in the past ten years that employee litigation against small businesses is growing as well. Projections from Progressive Insurance Company now show that businesses in may industries, including landscapers, are more likely to have an employment claim than a property or liability claim. Claims can be brought by employees, applicants, customers or clients alleging harassment, discrimination or other allegations against your business.

Employment claims are also notorious for incurring high legal expenses. Typical attorney fees for employment cases that even settled prior to trial are 100,000 dollars. According to the 2007 Employment Practice Liability Jury Award Trends and Statistics, the median jury award in employment cases was 200,000 dollars in 2007. These costs are also projected to increase.

Take into consideration the following typical defense costs when an employment related lawsuit is filed against your business:

• $12,000 - $18,000 for attorney fees to file an answer to a lawsuit and to begin the discovery of evidence.
• $20,000 - $30,000 for pretrial filings and preparation. These include additional motions and responses, excessive document analysis and review, written case evaluations or status reports, and settlement-related matters.
• $10,000 - $15,000 for mediation.
• $8,000 - $12,000 for attorney fees involved in a motion for summary judgment filed and the associated reply brief.
• $15,000 - $25,000 for attorney fees during an employment practices related trial. Plus, if you do not prevail in trial, you can incur significant costs of a verdict against you.

With Employment Practices Liability Insurance premiums as low as 500 dollars and still very low for companies with under 100 employees, the value for this type of insurance policy is very good for businesses of all sizes. At BearWise Landscapers, we recommend landscapers with employees to consider carrying this type of insurance coverage, and we highly recommend those with over 5 employees to request an insurance quote and review the advantages of this valuable coverage.

As discussed in multiple agent articles before this one, there have been quite a few changes in the Florida workers’ compensation rates over the past couple of years. In 2009, July 1st will mark the third rate change (the first rate change was on January 1st and another one was effective April 1st). On Wednesday, July 1st, 2009, the following workers compensation rates for landscapers will go into effect and all current policies issued with the April 1st rates will be endorsed to reflect this change. Here are the newest 2009 workers comp rates for landscapers:

• 0042 – This classification is applied to employees that are involved in the installation of landscapes. This classification cannot be used in Florida with employees classified as 9102 unless the operations are conducted by separate work crews. If the work is not separated, then all of the employee payroll must be classified as 0042 since it is the higher rated classification code. To read more details about this classification, please refer to the agent article on class code 0042. The current rate for class code 0042 is 7.11 dollars for every 100 dollars of remuneration.
• 9102 – This classification code is assigned to employees that maintain lawns and gardens. This is your standard lawn maintenance and classification used by most landscaping businesses to rate their workers’ compensation premiums. To read more details about this classification, please refer to the agent article on class code 9102. The current rate for class code 9102 is 4.20 dollars for every 100 dollars of remuneration.
• 0106 – This classification code is used for tree trimmers and specifically it is used for those employees or businesses whose operations involve leaving the ground to trim trees. When ladders, bucket trucks, and any other equipment assists employees to get their feet of the ground to prune or trim trees, then this classification is applied to the remuneration of that job. It also includes the chipping and cleanup activities associated with the tree trimming. To read more details about this classification, please refer to the agent article on class code 0106. The current rate for class code 0106 is 12.95 dollars for every 100 dollars of remuneration.
• 5183 – This classification code is applied to employees of landscaping businesses that engage in the installation or repair of underground lawn sprinkler systems. For a more detailed description of this classification code, please refer to the agent article on class code 5183. The current rate for class code 5183 is 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. Class code 8810 (rate: 0.28) is used for employees that only do clerical work and 8742 (rate: 0.49) is used for those employees that only have sales duties. Class code 0005 (rate: 5.35) is used for landscapers with employees engaged in nursery operations. We are available to provide you with more information about these classifications and how your own employees should be classified. Feel free to call our office to discuss this rate change and to have one of our agents quote your workers compensation policy.

I read an article the other day in the May issue of Turf Magazine. It gave a basic introduction to understanding how workers’ compensation insurance operates across the country. Here is an excerpt from the article:

It’s one of those parts of the business that nobody likes to deal with, but if you ignore workers’ compensation insurance, it can put your business, and even your personal assets, in jeopardy.

Workers’ comp is mandated by the state governments and is also required by the federal government on federal properties and in maritime operations. At its core, workers’ comp is the statutory requirement that an employer provide an employee coverage for medical costs and some percentage of lost wages in the event they are injured in the “course and scope of employment.” Injuries that occur as a result of the negligence of the employee are still subject to coverage under workers’ compensation. Except in unusual situations, the employee may not sue the employer in negligence for injuries received on the job.

This is a simplified description of workers’ comp, and there are differences between various policies in various states and jurisdictions. It’s important to check the specific regulations in your state.

Keep in mind that this article approaches the topic from a national level and workers’ compensation insurance is governed by the insurance department of each individual state. In Florida, there are specific requirements for workers’ compensation insurance. Landscapers are required to carry workers’ comp when they have over 3 employees, but we recommend that your business has this coverage even if you have one part time employee. Florida has around 600 classifications that are used to group employees by the type of work they do, and the rates to compute the insurance policy premium are set for each of those classifications. The classifications for landscaping employees are 9102, 0042, 0106, 5183, 0005, and a few others can be used as well. The rates in Florida are proposed by NCCI and approved by the state government. The rating system used to compute annual workers’ compensation premium uses a factor that uses past losses and premiums paid. It is called the experience rating modifier and here is another excerpt from this article where the CEO of Amerisafe, Allen Bradley, briefly describes it:

“There are some things businesses can do to control their costs,” says Bradley. One of the things that drives costs for individual accounts, he explains, is their experience rating modifier, or e-mod, a calculation that’s typically done after a company has had premiums over $5,000 for three years. (For a company that has premiums over $15,000, that experience modifier might be calculated after a single year.) “If you’re absolutely average for the industry, your e-mod will be 1.0. If you’re better than average, it might be .9, so you’ll then pay only 90 percent of an average account.”

The e-mod is driven by safety in the workplace and is based on payroll. Those with fewer than expected accidents for that industry/payroll will have a lower e-mod. The number of accidents is more important than the severity of the accidents, says Bradley. “If two companies each have a $100,000 payroll and the first company has seven accidents, none costing more than $5,000, and the other company has one accident totaling $1 million, the latter company will have the lower e-mod. Because the rates assume that bad things are going to happen from time to time in the workplace, but when you have a frequency of claims, the assumption is going to be one of those claims is going to be a bad one at some point.”

At BearWise Landscapers, our agency has a strong history of dealing with workers’ compensation insurance. We even have a sister company that is a third party workers compensation claims administrator and has full time nurses and adjusters on staff. We would like the opportunity to discuss workers’ compensation insurance with your landscaping business and look for ways to reduce costs in the long run through a strong safety program that will reduce your experience rating modifier. We also have access to rich dividend plans and other ways to immediately cut your workers comp premium. If you would like to speak with one of our agents regarding workers compensation questions or if you are simply looking for comparative insurance quotes, please do not hesitate to contact us or complete our online insurance questionnaire.

I read an article in a very old issue (July of 2005) of the Irrigation and Green Industry magazine. The title, ‘Liability Insurance… Read the Fine Print’, caught my eye on their website and the article had some great points. It discussed the costs of general liability insurance and things that had affected the rates. At the end of the article, the author discussed services that insurance agents should offer their clients and that landscapers should ask their insurance agent to provide for their business. Here are the eight services:

Help Reduce Payroll Rates: The larger your payroll, generally the larger are your payroll rates. But there are some guidelines and industry rules that are applied to payroll that most dont know about. You should check with your agent to make sure you dont overpay. For instance, there are different rates for those in the field and those in the office, for full- and part-time employees, and field workers can have lower rates if they also work part-time in sales, in the office, or come to the office for training.

Reduce Vehicle Rates: A lot of liability will fall on automobiles and trucks, says Cason. The more knowledge you have of how rates are determined, the more money you save. For example, where vehicles are garaged affects the rates. If they are parked overnight in a metropolitan area, the rates will be higher. However, if workers drive these vehicles to their homes in small surrounding towns, the rates can be considerably less.

Have Loss Control Service: Landscapers should ask their agents to implement a safety program for loss control, to control risks, and to reduce premiums, says Hartman. Many landscapers are resistant. They may feel they dont have the time or staff. And I think theres a feeling in some, though not all landscapers, that the agents are out to get them and might find something wrong. But if we do find something wrong, we want to help fix it. Were there to help. And if, as a result, you have less equipment theft and fewer accidents, your premiums will be that much less.

Have Your Contracts Reviewed: Theres no reason you should not have your agent review your contracts, says Graham. He should be able to identify areas of concern, make suggestions, strike harmful language, adding this or that. If a renewal is coming up, the carrier might not have certain coverage, so the agent knows perhaps that its time to find someone else. Youd be surprised at what youll find in contracts. Some installation coverage will state that trees, shrubs and plants will not be covered. How would a landscaper feel about that?

Have Your Agent Visit Job Sites: Your agent is a salesman to you, the landscaper, but also your salesman to the underwriter, Graham says. Ask your agent to visit your jobsites, and if he reports to the underwriter that your workplace is great, awesome, wonderful and safe, the cream will rise and that will impress the underwriter. You want an agent who will do more than just fill out forms.

Have Your Agent Provide a Quarterly, Or At Least an Annual Report: If you see where your losses are, especially if there are patterns, you can make adjustments, says Graham. We do what we rarely see anybody else do, and that is prepare graphs for the past five years for accidents, and track it. One landscaper studying the graph and data saw that he had higher claims at the start of the season. Thats when regular employees have been off for a while and are rusty, and new people are hired. He learned to have a special focus on safety at that time of year.

Have Motor Vehicle Reports Made: Expect your agent to flag the department of motor vehicles, says Graham. A stray ticket here and there may not be important. But you want to be aware if any of your employees are having serious driving problems.

Aggressively Manage Claims: Have your agent review all of your claims before they are turned in, Graham says. A lot of claims may not be your fault; they are so small they will give you more trouble than they are worth, as well as other reasons.

If you are unsatisfied with the service you are currently receiving from your insurance agency and would like to understand the variety of services offered by BearWise Landscapers, please contact our office today. We handle the insurance for many landscapers throughout the state of Florida and can provide specialized insurance expertise for your landscaping business.

Businesses of all types purchase general liability insurance for covering the premises and operations liability loss exposures and products and completed operations liability loss exposures faced by their business. Because general liability insurance covers a wide range of liability loss exposures faced by most organizations, it is the foundation for most organizations’ liability insurance programs. This is very true for landscaping businesses as well.

Most general liability insurance policies are based off of a standard occurrence coverage form designed by the Insurance Service Office, but many insurance carriers make changes to the policy wording, so it is very important to read your actual policy for coverage terms and conditions. These policies have three coverage sections:

Coverage A – Bodily Injury and Property Damage Liability

Coverage B – Personal and Advertising Injury Liability

Coverage C – Medical Payments

Most claims fall under the Coverage A section of the general liability policy and I will go into more depth at a later time about the practical ways that this coverage applies to landscapers.

In addition to general liability insurance, other insurance policies can be used to cover liability loss exposures. An umbrella liability policy or excess liability policy will increase the limits over a general liability policy and can increase the limits of other coverages as well. Umbrella and excess liability policies are slightly different in the type of coverage they offer. Commercial auto insurance has a liability section to cover the liability loss exposures associated with driving a vehicle. Even workers’ compensation insurance is a type of liability policy to cover the statute liability imposed by the government for employees that are injured on the job.

If you have any questions about the liability loss exposures of your landscaping business, or if you would like to speak with an agent about designing a comprehensive insurance program, please do not hesitate to contact BearWise Landscapers.

Regardless of what else they might know about the United States legal system, most adults and even many children know, from either their own experience or the mass media, that “anyone can be sued.” In the context of commercial risk management for landscaping businesses, this generalization can be restated as “every organization has liability loss exposures.” A loss exposure is any condition or situation that presents a possibility of loss, whether or not an actual loss occurs. In terms of liability, a liability loss is any loss that a person or business sustains as a result of a claim or suit against that person or business by someone seeking damages or some other remedy permitted by the law.

For example, any landscaping business with an office could be sued for injuries resulting from a dangerous condition on the office property. Holding the office open to the public for business therefore creates a liability loss exposure because having persons on the property presents the possibility that such a suit could occur.

Other examples of loss exposures for landscapers include bodily injury or property damage caused by lawn mowing operations, vehicle accidents, breach of contract, general negligence, intentional torts, strict liability torts, contributory negligence, libel and slander, interference with property rights, trade disparagement, unfair competition, fraud, nuisance, vicarious liability, liability based on statutes, and many other cases.

Liability losses can range from small nuisance claims to multimillion-dollar judgments. Improperly handled or covered by insurance, liability loss exposures can result in losses that prevent a business from reaching its goals and can even bankrupt the business. For landscaping businesses, the best way to manage liability loss exposures is through effective risk control and risk financing. Risk control techniques are intended to prevent liability losses from occurring or to reduce the amount of liability losses that do occur. Risk financing techniques provide ways of paying for losses that actually occur and the most cost effective way of doing this as a landscaper is through purchasing appropriate insurance to cover your exposures.