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.

Many landscapers ask our insurance agents, “what is the difference between remuneration and the basic payroll I have for my employees?” In all states but one, Workers’ Compensation insurance uses ‘remuneration’ as the exclusive basis for computing premiums (the state of Washington currently allows contractors to use hours worked instead). Although payroll is the most common component of remuneration, it is not the only one. In Florida, the rules about remuneration are written by the National Council on Compensation Insurance (NCCI). But keep in mind that some states are non-NCCI jurisdictions, and there may be some significant differences in how remuneration is defined. In Florida, remuneration is the premium base used to calculate workers’ compensation premiums. It is generally referred to as payroll, but it includes more than the employees’ weekly paychecks as noted in the NCCI definition. Remuneration is defined to mean money and substitutes for money and it includes the following:

• - Wages or salaries, including retroactive wages and salaries
• - Total cash received by employees for commissions, draws against commissions, piecework, profit sharing, and incentive plans
• - Bonuses, including stock bonus plans
• - Pay for holidays, vacations, and sick leave
• - Employees’ share of Social Security and similar statutory plans even if paid by the employer

Remuneration excludes some pay received by employees and the following can be deducted from the total remuneration:

• - Overtime - the extra amount of pay above the regular wages may be excluded for overtime hours that are worked by employees.
• - Tips
• - Payments by employees for group insurance or pension plans
• - Special awards for invention or discovery
• - Severance Pay
• - Executive officers have a minimum and maximum limits for their payroll if they are included on the policy
• - Partners and Sole Proprietors have a fixed amount of payroll if they are included on the policy

Please refer to the article entitled ‘Introduction to Workers Compensation Insurance’ for more information on workers comp insurance for Florida landscaping businesses. If you have any more questions about the difference between payroll and remuneration and how this affects the premium on your workers’ compensation insurance policy, please do not hesitate to contact the agents at BearWise Landscapers.

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.

The Florida Nursery, Growers, and Landscape Association (FNGLA) has endorsed a workers’ compensation insurance program for their members. Under the program, eligible FNGLA members may qualify for special benefits on their workers’ compensation policy through Summit’s family of insurance carriers. Click on the image to the right to be redirected to the FNGLA website to read the brochure announcing their endorsement of the workers’ compensation program.

FNGLA members must sign a safety pledge in which they commit to the implementation and continuation of a strong safety program as outlined by bullet points in the pledge. In addition to qualifying for the safety credit available in Florida that removes 2% of the workers’ compensation premium, these landscaping businesses are also eligible for additional benefits that can significantly reduce their premium. The goal of committing to a strong safety program is that it will decrease the experience modification factor of the landscaping business over time and directly reduce future premiums. The program also allows the landscaping business to qualify for a special dividend plan created for FNGLA members. Depending on your workers’ compensation claims, this program can save a large percentage of your premium each year. As we discussed before, dividend plans can be very beneficial to landscaping businesses since the majority of insurance premium spent will go to workers’ compensation insurance over other lines of coverage.

If you are a member of FNGLA and are interested in receiving a workers compensation quote through this program designed exclusively for your landscaping company, then please do not hesitate to contact our office or request a quote through our easy online form.

Summit is the largest provider of workers’ compensation insurance in the state of Florida. The company is a member of Liberty Mutual Agency Markets (a business unit of Liberty Mutual Group), which consists of property and casualty, and specialty insurance carriers that distribute their products and services primarily through independent agents and brokers. With their main office complex in Lakeland, Summit manages four insurance carriers writing workers’ compensation insurance in Florida. This family of carriers includes Bridgefield Casualty Insurance Company, Bridgefield Employers Insurance Company, BusinessFirst Insurance Company, and Florida Retail Federation Self Insurers Fund. For more information about Summit and the insurance carriers they manage, visit their website at www.SummitHoldings.com

As a division of Black Bear Insurance Agency, BearWise Landscapers has access to Summit’s family of carriers and would like the opportunity to offer a Summit workers’ compensation quote to your landscaping business. According to our records, Summit currently underwrites the workers’ compensation insurance on over 25% of all landscaping businesses in Florida. If your business has not received a comparative quote from Summit recently, please contact us or complete the online quote request form for our agents to put together a proposal on what Summit can offer your landscaping company.

There has been a lot of activity on the Florida workers’ compensation front over the past few years and it has increased in 2009 with two rates changes so far this year (one rate change effective January 1st and the other effective April 1st). To bring you up to date, Florida had the highest workers’ compensation rates in the country in 2003. There were some major reforms to the system at that time which resulted in over a 60% decrease in rates entering into 2009. Part of the reform that was effective in controlling the cost of workers’ compensation claims was to limit the amount of fees that claimants’ lawyers could charge for small recoveries. This was reversed last fall by a Florida Supreme Court case of Emma Murray v. Mariner Health in which the court ruled that lawyers should not have their fees limited to the size of the recovery instead of their normal hourly fees. Florida responded with a mid-year increase in the 2009 rates.

Since this time, the Florida Congress has been in session and has tried to address the issue. They passed a bill called House Bill 903 that responded to the Emma Murray decision by reinstating the percentage of benefits method of calculating attorney fees rather than considering other criteria such as the lawyers’ time spent on a case, the novelty issues involved in the litigation, and the level of expertise in the field of workers’ compensation that the attorney possessed. This bill in effect overturned the Emma Murray decision by the Florida Supreme Court.

The effective date of this bill is July 1st, 2009. The rate increase that was effective April 1st, will be discontinued as of July 1st and the new workers’ compensation rates will be the same as those issued on January 1st.

On top of all these changes is the fact that although House Bill 903 did succeed in once again lowering the workers’ compensation rates, it did not decide the constitutionality of the different methodologies for calculating attorneys’ fees in workers’ compensation cases. Many people anticipate it only to be a short time before another case comes along to challenge the new bill. This issue will most certainly be considered by the Supreme Court at some future date and it still remains questionable as to how injured worker attorney’s fees will be paid. When the bill gets overturned, the rates will inevitably rise again. But for now, enjoy the new lower rates that will be effective on July 1st, 2009. I will publish another article before then with those new rates.

The Florida workers’ compensation class code of 0005 is the primary class code used by landscapers that also have nursery operations. More and more landscaping businesses are creating nursery divisions to increase revenues and profit margins on installation projects and this introduces a new class code to their Florida workers’ compensation policies. We receive many questions from landscapers that operate tree nurseries regarding which employees should be classified to this code under their Florida workers’ compensation policy. The definition of the class code from NCCI states that 0005 is used primarily for employees involved in the following operations:

Code 0005 is applied to all acreage or facilities devoted to the propagation of trees, shrubs, plants. It Includes all acreage or facilities devoted to the raising and harvesting of nursery and foliage plants in more than fifteen (15) gallon containers or in the ground. Refer to Code 0035 for the raising and harvesting of such plants in fifteen (15) gallon or smaller containers. Codes 0005 and 0035 shall not be assigned to the same risk unless the operations described by these classifications are conducted at separate locations with no interchange in labor.

Code 0005 operations involve planting, fertilizing, watering, trimming, potting and repotting plants, and transplanting at the nursery location. The classification includes retail or wholesale sales conducted from the nursery location. Additionally, these insureds may deliver their products to customers and also plant these products at their customers’ location(s).

When planting operations are more than incidental to an insured’s nursery operation, Code 0042—Landscape Gardening & Drivers is applicable to the planting operations

Refer to Code 0106 for tree maintenance and Code 2702 or Code 2709 for tree harvesting performed by contractors not involved with the original planting.

Sod dealers who do not grow sod are properly classified to Code 0005; however, sod growing and harvesting operations are included under Code 0037. Sod installers are classified to Code 0042.

Please feel free to contact us for a free copy of the complete definition for Florida workers’ compensation class code 0005 or any other classification that could apply to your landscaping business. We can also provide workers’ compensation quotes with the current rates for this classification code.

The Florida workers compensation class code of 5183 is the class code used to rate the payroll of landscaping employees involved in irrigation installation and repair. Many landscapers offer irrigation services to clients and the payroll from those projects must be reported using a separate workers compensation classification code. The definition of the class code from NCCI states that 5183 is used primarily for employees involved in the following operations:

Code 5183 is applicable to plumbing operations provided that the work performed is “not otherwise classified” (NOC). Insureds contemplated by Code 5183 may install, remove, or repair equipment that is used to direct gas or water supplies to a destination. This equipment includes but is not limited to piping and related fixtures, appliances, and accessories. No limits have been established as to the size of the pipe being repaired or installed.

The installation of underground lawn sprinkler systems is included under Code 5183. Irrigation and drainage system construction operations conducted in connection with lawn sprinkler installations are classified under another code. Trenching work performed by the same contractor engaged in the installation of underground pipes for sprinkler systems is assigned to Code 5183 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.

Information on the current Florida workers compensation rates (Effective April 1st, 2009) is available in an article through that link. Please be aware that these are subject to change based on decisions of the Florida’s Insurance Commissioner and the claim data information he receives from NCCI.

Please feel free to contact us for a free copy of the complete definition for Florida workers compensation class code 5183 or any other classification that could apply to your landscaping business.

The Florida workers compensation class code of 0042 is used to rate the payroll of employees that engage in landscape installation operations. The definition of the class code from NCCI states that 0042 is used primarily for employees involved in the following operations:

Code 0042 is applied to insureds primarily engaged in planning, clearing, grading and planting necessary for landscaping operations. 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. These insureds may have nursery operations but such work would be limited and usually conducted to furnish stock for their landscaping business. Sod installers are also classified to Code 0042.

The essential difference between the application of Codes 0042 and 9102 to a job is that Code 0042 is applicable to work involving new landscaping installations, whereas Code 9102 is applicable to work involving the maintenance of existing landscaping and/or lawn maintenance.

Information on the current Florida workers compensation rates (Effective April 1st, 2009) is available in an article through that link. Please be aware that these are subject to change based on decisions of the Florida’s Insurance Commissioner and the claim data information he receives from NCCI.

Please feel free to contact us for a free copy of the complete definition for Florida workers compensation class code 0042 or any other classification that could apply to your landscaping business.