NOTE: This article about equipment floater insurance was published in the March issue of Turf Magazine.

Protecting Your Landscape Equipment
An introduction to equipment floater insurance

Lawn care and landscape businesses have unique insurance needs that are not encountered by other types of businesses. In the landscaping industry, tractors and other pieces of equipment are some of your largest assets. This equipment travels to the properties of multiple clients each day and, therefore, has a higher risk of not only theft, but other causes of loss and damage.

These facts are common knowledge to many landscapers, but a large percentage do not realize the insurance implications. A typical property insurance policy will only cover your equipment while it is in your office building or other place of storage. A commercial auto policy may cover damage to your trailers, but it will not protect your equipment while on the trailer. To protect this equipment with insurance, a policy needs to be written and rated to cover valuable items while away from the premises of a building.

Equipment floater insurance is specifically designed to cover your landscape equipment and tools while located anywhere in the broad coverage territory. It is a type of inland marine insurance, and that general term may be used on your policy documents. Virtually any type of mobile articles, tools, machinery and equipment (other than motor vehicles designed for highway use) can be insured under an equipment floater.

In order to allow the flexibility to meet the individual coverage needs of insured businesses, there is not a specific contract wording used by every insurance carrier in their policy documents. This is different than insurance like standardized general liability, which will have the same policy documents and unendorsed contract terms regardless of the insurance carrier. When purchasing equipment floater insurance, it is important to ask questions and understand the insurance coverages that are offered.

The good news for landscapers is that the price of equipment floater insurance is a good value, with annual premium rates ranging from 1 to 4 percent of the total value of the insured equipment. Some insurance carriers also provide discounts when this coverage is packaged into one insurance policy with general liability or commercial auto coverage. Other premium discounts may be available for safe storage techniques, theft deterrent systems, claims history and equipment maintenance procedures.

Equipment floater insurance typically has a substantially lower premium rate for scheduled equipment than the blanket coverage that applies to all other equipment. Most policies contain a schedule listing of each piece of equipment with the identification number, year, make, model and value. This is commonly used for landscaping equipment with an individual value of more than $1,000. Scheduled equipment will usually have lower deductibles and other coverage advantages in addition to the lower rate.

As the owner of a landscaping business, you certainly have many things on your mind. Take time to verify that your landscape equipment is adequately covered with equipment floater insurance, since it cannot be properly covered under other insurance. Research the coverage options to see if they fit your business needs and check the accuracy of the equipment schedule. On the declarations page of the policy, the premium will be computed with the associated rates and premium discounts. If no discounts are applied, or if other corrections need to be made, then I recommend you discuss available options with your insurance agent.

NOTE: This article about Equipment Floater Insurance was published in the December issue of PRO Magazine.

Protection Against Stolen or Damaged Equipment
Equipment floater insurance is the best option when it comes to insuring your landscape equipment.

Because you and your landscape equipment are on the move each and every day, ordinary property insurance is not enough to cover the risk of having your equipment stolen or damaged.

Equipment Floater Insurance:

• • Covers your equipment from a number of perils at any location in the United States
• • Is typically quite affordable
• • Can often be packaged into the same policy with your general liability and other business insurance coverages.

Many insurance carriers offer different coverage terms and conditions, because equipment floater insurance is not written on a standard insurance contract used by all carriers, as is the case with general liability insurance. That’s why it’s important to ask a lot of questions before purchasing this type of insurance.

• Is Theft Covered? – Equipment theft represents your biggest exposure to loss, and has become an even bigger problem during this recession. However, some policies exclude this cause of loss from the coverage while others put restrictions on it. Ask your insurance agent if theft is covered on the policy and what limitations there are.
• Replacement Cost Value or Actual Cost Value? – If your business has a claim, there is a difference in the amount you will recover if the policy was based on replacement cost value or actual cost value.
  - Replacement cost value has a slightly more expensive premium. However, it will pay the cost to purchase a replacement piece of equipment with one of like age and usability to get you back to work.
  - Actual cost value will only allow the claims adjuster to pay the current value of your equipment. Replacing a two-year-old commercial mower is usually more expensive than the actual worth of that mower.
• Deductibles – A typical deductible for equipment floater insurance is $500 for each occurrence. Check the deductible on your policy to see what it is, and if it applies per occurrence or per item.
• Limit on Value of Unscheduled Equipment – Some policies will pay a maximum of $1,000 for every piece of equipment that is not scheduled on the policy while others will pay a maximum of $2,500. Make sure that your mowers and other pieces of equipment exceeding this limit are individually scheduled on the policy.
• Rented or Leased Equipment – If your business rents or leases equipment, you may need to purchase an endorsement to cover that equipment on your policy. There may also be additional limits that apply to these pieces of equipment. You should thoroughly communicate this issue to your agent and double check your quotes to make sure this is properly covered.
• New Equipment Purchases – During the course of a typical one-year policy period, you will more than likely make many equipment purchases. Ask your insurance agent if your policy allows a 90-day grace period from the time of purchase for these items to be added to the policy. Without that addition to the coverage, you will need to endorse your policy immediately after each equipment purchase for those items to be insured.

These tend to be the main issues faced by landscaping businesses when comparing quotes on Equipment Floater Insurance and making a purchasing decision on this coverage. As mentioned earlier, since there is not a standard coverage, you have to pay closer attention to what is offered by the policy you are considering. You should also know that the rate for individually scheduling pieces of equipment on the policy by their year, make, model, value, and identification number will keep your premium substantially lower than by not scheduling those items. Typically the rate for scheduled equipment is a fourth of the rate for unscheduled equipment values and you avoid the coverage limitations on those pieces of equipment as noted above. Overall, these policies are affordable and are a valuable risk financing tool that I recommend landscapers of all sizes consider for their business. Just keep in mind that when considering these policies, you should pay attention to the unique specifics of the coverage that is offered.

I am often asked by landscapers about the importance of equipment floater insurance. Why can landscape equipment not be covered by regular property insurance or other insurance?

Here are three facts to consider about your business operations:

• 1. Lawn Mowers and other equipment travel to the properties of multiple clients each day.
• 2. This equipment therefore has a higher risk of not only theft but other causes of loss and damage.
• 3. This equipment also includes some of the most valuable assets of your landscaping and lawn care business.

There are many insurance implications to this information.

A typical property insurance policy will only cover your equipment while it is in your office building or other place of storage. A commercial auto policy may cover damage to your trailers, but it will not protect your equipment while on the trailer. To protect this equipment with insurance, a policy needs to be written and rated to cover valuable items while away from the premises of a building.

Equipment floater insurance is a type of inland marine insurance. It is specifically designed to cover your landscape equipment and tools while located anywhere in the broad coverage territory. Virtually any type of mobile articles, tools, machinery, and equipment (other than motor vehicles designed for highway use) can be insured under an equipment floater.

The price of equipment floater insurance is a good value for your business with annual premium rates ranging from one to four percent of the total value of the insured equipment. Some insurance carriers also provide discounts when this coverage is packaged into one insurance policy with general liability or commercial auto coverages. Other premium discounts may be available for safe storage techniques, theft deterrent systems, claims history, and equipment maintenance procedures.

Due to all of the equipment floater insurance questions we are receiving, I plan on writing more articles on this topic in the upcoming months. If you have any specific questions about the coverage, please feel free to contact me directly or one of the other insurance agents at our office. We are also available to offer comparative insurance quotes to lawn care and landscaping businesses in Florida.

As business owners, you are often approached with advertisements and salespeople that state you can save 15% or more on your insurance premium from this company or that company. Some of these companies may actually have better rates and would save premium dollars for your business, but other companies will simply cut coverage to lower the premium. It is important to understand the coverage offered by different insurance quotes and how insurance premium is calculated.

Insurance premiums are usually computed using a predetermined rate that is multiplied by either your payroll or revenue totals for the policy term and then adjusted based on your business characteristics. For example, workers’ compensation insurance in Florida has rates predetermined by the state government and all insurance carriers in the state use those rates by multiplying it by your payroll in the appropriate classifications. Here is a link to an article with the 2009 rates for Florida landscaping businesses.

The insurance premiums for general liability policies are based either on your projected payroll or your projected revenues. This rating basis is then multiplied by a rate determined by the insurance carrier. When comparing premiums on these policies, you can look at the specific rate or make sure that both insurance carriers use the same payroll or revenue figures.

Equipment floater insurance typically has separate rates for the value of equipment that is individually scheduled on the policy and the value of unscheduled equipment that is protected under the blanket equipment coverage. As is the case for the other insurance policies, these individual rates should be listed on the ‘declarations page’ of the policy documents.

As a landscaping business, if you ever have questions regarding insurance rates and total premiums, please feel free to ask an insurance agent at BearWise Landscapers. We would also welcome the opportunity to walk through comparative insurance quotes received by your business to analyze differences in coverages and actual rates. Let us know how we can be of assistance to your business insurance needs!

In a previous article, I recommended insurance to landscapers with one owner and no employees. In this article, I will discuss how the insurance needs change when the landscaping business grows and adds two employees. The primary difference in recommended insurance coverage is that the landscaper should add workers’ compensation coverage to protect the company from the liability of injury to these employees.

For a local landscaping business with one owner and two employees, we recommend that the business carries four insurance coverages: general liability, commercial auto, equipment floater, and workers’ compensation.

1. General Liability: This policy provides protection to your business from many types of lawsuits. We recommend that you obtain limits of $1,000,000 for each occurrence and $2,000,000 for the policy period. For lawn maintenance companies, your premium for this coverage will be around 650 dollars for the year and if you install landscapes, your premium will be slightly higher at around 850 dollars. Depending on your business model and other variables, we have several insurance carriers that might be able to offer lower premiums.

2. Commercial Auto: This policy provides protection for your vehicles and the liability arising out of their use. It is important to move the vehicles you use for your business to a commercial auto policy instead of a personal auto policy. We recommend a limit on this coverage to be $1,000,000 combined single limit, and for small landscapers wishing to save money, we recommend that you should not go below $500,000 combined single limit. For a landscaper with two drivers, one truck worth around 10,000 dollars, and one trailer worth around 5,000 dollars, the premium will vary depending on your radius of operations and driving record. If your drivers have a good driving record, you are looking at a premium in the ballpark of 1,500 dollars to 3,000 dollars depending on all those variables. We have many insurance carriers we use for these policies, but have been very pleased with Travelers’ and Progressive’s commercial auto rates and service for landscapers with fewer than 5 vehicles.

3. Equipment Floater: This policy provides protection for your equipment against a variety of exposures with the highest threat being theft. Lawn mowing equipment and landscape installation equipment can be very expensive for a new business and you want to make sure this equipment is protected. For a landscaper with 15,000 to 30,000 worth of equipment, you can expect a premium on this coverage in the range of 200 dollars to 600 dollars. We often package this coverage in wit the general liability insurance policy, but we can also write it by itself through a few insurance carriers.

4. Workers’ Compensation: This policy provides protection for your business when your employees are injured during the course of employment. It will pay the state regulated hospital expenses and a portion of the payroll from missing time off work. Most states do not require your business to carry workers’ compensation insurance until you have over 3 employees, but we recommend that you carry it regardless. Even if you have one part time employee, our agents recommend that you purchase this coverage to protect your business in the event that an employee gets injured. In Florida, for two employees with an annual remuneration of 30,000 dollars, you are looking at a total premium of 1,470 dollars for your workers compensation coverage if your business operations are landscape maintenance and 2,250 dollars of premium if your operations are landscape installation.

With these four insurance coverages, your small landscaping business will have the protection it needs to avoid the losses that would otherwise end your landscaping career. These policies will allow your business to be protected from most loss exposures, so you can focus on expanding your clientele. For more information or to receive comparative insurance quotes, please contact us or complete the online quote request form. We enjoy working with landscapers of all sizes and look forward to being your insurance advisor as your business grows over time.

In yesterday’s article, I discussed the National Equipment Register and the services they provide to equipment owners. When I reviewed their website, I came across the following Brochure with Tips for Preventing Equipment Theft. Please take the time to read this information and incorporate it into your employee handbooks and business procedures. These are great procedures to follow and can even lead to discounts on your Equipment Floater Insurance Policies.

One of the crucial points that they make in the brochure is to keep detailed records and manage your inventory. Here is an excerpt:

INVENTORY MANAGEMENT

Keeping detailed records of your equipment, which can be made part of your fleet management
or accounting functions, dramatically increases the chance that a stolen unit may get recovered. If
you make it known that these records can be made readily available to law enforcement, this may
also deter theft.

• • Keep a detailed and accurate inventory of all equipment on a given worksite including
  a record of equipment location assignments, the dates of delivery and anticipated
  return.
• • Record year, manufacturer, model number and PIN or serial number from actual
  plates/decals. When describing a unit, use actual manufacturer model names; avoid
  using generic terms such as “tractor” or “dozer”.
• • Register your equipment on a national database that works with law enforcement,
  such as the National Equipment Register (NER). Ask for theft deterring decals to
  show thieves that this has been done.
• • Use etching tools, die stamping or a steel punch to duplicate a unit’s Product
  Identification Number (PIN) or other serial numbers in at least two places on the
  equipment, one obvious, one hidden; record the location of these numbers. This will
  help in the identification of your equipment and proof of ownership. Adding another
  number unique to you (Owner Applied Number – OAN) will also help in proving
  ownership.
• • Take photos of all units from all four sides. Update photos as needed (when
  attachments are added or removed). Photograph units on their transport trailers as
  well.
• • Customize the unit with unique paint colors, such as painting the roof a distinctive
  color or painting the unit number in large characters. Note such modifications as well
  as any decals, damage, company / owner applied numbers, etc… that are unique to
  the unit when you record equipment details to aid identification and proof of
  ownership.
• • To aide in the identification of a unit in the even it is recovered after a theft, record any
  and all numbers on the unit along with that number’s location. Be sure to include
  engine numbers.

Equipment theft is a large problem faced by landscaping businesses. In addition to purchasing an Equipment Floater Insurance Policy, landscapers can combat this problem through the National Equipment Register. This organization allows businesses and individuals to report stolen pieces of equipment and they compile a database with that information. They also provide a HELPtech program to pre-register and deter equipment thefts. For more information, please visit their website at www.nerusa.com

Equipment theft is also a growing problem in the United States. Reports to Insurance Services Office, Inc. (ISO) show an increase of up to 20% in the value of equipment thefts every year since 1996 and show theft as the most common cause of loss for heavy equipment – over 50% of all causes of loss. Inland Marine theft losses alone reported to ISO in 2000 were over $127 million. Some national surveys have suggested that the total figure could be as much as $1 billion each year in losses and indirect costs, such as rentals, downtime, wasted management time and project overrun penalties. Perhaps the most worrying statistic for owners and insurers is that as little as 10 to 15% of stolen equipment is ever recovered. Make sure that your equipment is properly covered by an Equipment Floater Insurance Policy. You can quickly request a quote through the link at the top of this website.

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.

Insurance is a legal contract between your landscaping business and the insurance carrier. The contract outlines the conditions, exclusions, coverage limits, and many other variables related to how the insurance will apply in a claim situation. It is important to review all policies when you receive them and understand the key concepts of what the policy will and will not cover. As the single source for landscapers’ business insurance, we recommend that you call your BearWise Landscapers agent to review any coverage questions you may have. Our agents will also take the time to sit down with you and discuss the different aspects of your insurance policies.

On Equipment Floater and Commercial Property insurance policies, we often run across landscapers that are unaware of the way their insurance carrier is valuing the covered property. Your insurance policy will state the way in which it values property and you should consider this when purchasing insurance. The type of property valuation not only affects the policy’s premium, but will greatly affect the amount your business recovers in the event of a loss. There are a few ways of valuing property covered by insurance policies, but the most common ways are through the Actual Cost Value (ACV) and the Replacement Cost Value (RCV).

Actual Cost Value – This approach to property values will judge the value of a stolen lawn mower by the current market value of a similar mower made in the same year with just as much wear and tear from the hours it has been used. The insurance carrier will write a check to your business for this depreciated value and that will be the end of the claim. In most cases, the landscaping business has to pony up more money to purchase another mower.

Replacement Cost Value – This approach to property values will judge the value of a stolen lawn mower not by the market value, but by the cost it takes to replace it. The replacement lawn mower will be similar in its functioning ability and equal or greater in overall value to the one that was stolen.

For landscapers, you need to make sure your equipment floater and commercial property insurance policies use the replacement cost valuation. This simple change in your policy will hardly affect your premium and will potentially have a huge impact on your business when you have a claim. If you have any questions about your current insurance policies, please contact me or one of our other licensed insurance professionals.

Equipment theft seems to be a hot topic in the industry right now. Theft is becoming more and more prominent and landscapers are constantly being targeted. Many landscapers/lawn maintenance contractors are starting to address the issue and purchase insurance for their equipment. Equipment coverage is very affordable and I strongly recommend looking into it. Naturally I am bias, but clients tend to not ask for this coverage until after they need it.

If you choose to forego equipment coverage you should have enough liquid assets set aside to keep you business operating if your equipment were to go missing or become inoperable.

With equipment coverage being so cost effective, as an owner you can devote more of your cash reserves into growing your business and less into protecting it.

Please fill out an online quote request for an equipment floater if you are interested in this coverage.