Ep. 494 Understanding Premise Liability for Landscape Maintenance Companies
Landscape Group Vice President Drew Garcia sits down with John Fischl, Regional Executive with Sentry Insurance, to discuss premise liability risks for landscape maintenance companies, focusing on preventing slip and fall accidents and strategies for mitigating these risks.
Show Notes: Sentry Insurance, Subscribe to Rancho Mesa's Newsletter
Director/Host: Drew Garcia
Guest: John Fischl
Producer/Editor: Jadyn Brandt
Music: "Home" by JHS Pedals, “Breaking News Intro” by nem0production
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Transcript
Drew Garcia: Welcome back everybody. I'm Drew Garcia, Vice President of the Landscape Group here at
Rancho Mesa. You're listening to StudioOne™ our safety and risk management podcast. Today we're joined by a Regional Executive of the Pacific Region for Sentry Insurance John Fischl. John welcome to the show
John Fischl: Oh, thank you, Drew. It's great to be with you.
DG: Oh, we appreciate you taking the time to come back in here. So, Sentry is a big partner of ours and particularly for me in supporting the landscape industry. And today we're going to take a few minutes to talk about premise liability, particularly for landscape maintenance companies, you know, protecting themselves, protecting their customer, protecting their insurance carrier, and also the general public from exposures that can exist on a commercial property.
And primarily we're talking about slip and fall, trip and fall issues that can occur where the insurance carrier might have to get involved if there's an injury or a claim. John, talk to us a little bit about the state of that market, what you guys are seeing, and then we're going to get into a little bit about some things that where we think landscape businesses can better protect themselves in the future.
JF: Well, Drew, as you know, the climate for liability claims in California has gotten very, very difficult. The personal injury attorneys, and I think everybody is aware of the amount of marketing those folks are doing. We've all seen that the hundreds of commercials on television for all the different firms and billboards, etc. Suffice it to say that if somebody gets injured on property, they are going to call--or very likely will call--one of those personal injury attorneys. So because of that and the fact you've heard the term social inflation, people on juries nowadays are much more apt to award large sums of damages for injuries, pain, and suffering, etc. So because of those two things: the advanced level of marketing from the personal injury attorneys and the social inflation we see, even relatively minor injuries are turning into very large settlement amounts in a lawsuit. So that is a real challenge for anybody in the business of making sure that premises open to the general public are safe.
DG: A good point. And you see, you know, the impacts that has from the insurance carrier standpoint and ultimately the trickle down to the policy holder. When there's pressure on a particular line of insurance, and in this case we're talking about general liability and what that might bring from these premise liability exposures, when there's significant pressure on a particular line, like we've seen over the last five or six years with commercial auto, what's a typical reaction or what type of reactions could be seen from insurance carriers when there is that unanticipated pressure, maybe not enough rate adequacy, what are some positions that carriers have taken in the past to either handle or deal with scenarios like this?
JF: Well, as an insurance carrier, you only have a couple of choices. Number one, you can decide that the level of losses and the frequency of losses will be greater than what you can anticipate and you would then have no choice but to exit that market and in fact in the last year we've seen a major provider of liability coverage in California for the landscape industry do just that they exited the market. And this has happened multiple times over the last several years. The other thing a carrier can do is kind of hang in there, tighten up their underwriting, look less favorably upon a landscape operator that has some frequency of claims, perhaps not offer coverage to that landscaper, and also increase rates, which is ultimately what has to be done when the cost of lawsuits continues to rise. Carrier has no choice but to raise rates. That should be understood by everybody at this point.
And I think if you've been in business, you know, longer than five years at this point, you've probably been through some sort of market with insurance where you've been faced with non -renewal or significant rate increase. And, you know, it comes as a result of issues, you know, and I think that the stance that Sentry's taken at this point in terms of trying to work with the landscape industry to better shed, mitigate, and manage risk as opposed to having to non–renew or to exit the space is greatly appreciated.
So let's talk a little bit about what things a landscape maintenance company could do to maybe better protect, like I said, their business, their customer, the general public, and then ultimately you as the insurance carrier to avoid being pulled into maybe an incident that really could have been avoided.
JF: I think there are two primary avenues that a landscape maintenance operator needs to carefully look at. Number one is anytime that operator has the opportunity to control the language in that maintenance agreement, that contract that makes clear who is responsible for injury on those premises from an unsafe condition. If you do not have the ability to control that language, for example, you're signing an agreement with a large property management firm or a municipality, keep in mind that the attorneys for those property owners have crafted the language so that claims on their premises can be transferred whenever possible to the vendors who are providing services for those premises. So knowing that number two is to put a procedure in place by which your maintenance crews are looking for unsafe conditions and reporting those.
And a good procedure would include perhaps taking photographs using their cell phones. Let's say for example of a heaved bit of walkway from a tree root. That photo goes into the office. Somebody in the office is then responsible for including the images in a quick narrative to the property owner that, “Hey, want to notify you, we've found this unsafe condition, somebody could trip and injure themselves, we recommend that you repair that unsafe condition as soon as possible.”
And then keep a record of that notice. And perhaps even once a year if that condition goes un-remedied, re-notify on a periodic basis. This way, when somebody does trip and fall and they break a bone and they call a personal injury attorney and that attorney sues the property owner, the insurance company for that property owner is going to try to transfer that claim to the landscape maintenance company's insurance.
If you've got documentation that shows you notified a property owner of the unsafe condition, you're now kind of off the hook and it is back in the property owner's liability because they were the ones negligent that even when told by you that they had an unsafe condition they did not remedy it. So the key is to inspect and report and retain those notices to ensure that these sorts of claims won't end up with your insurer and ultimately result in either the non -renewal of your insurance or the raising of your rates.
DG: Very clear and very simply put I don't think another question could probe any more information that our audience would need in that scenario. But if I can quickly recap to see if I've got this right, so we're focused on our contracts and whether that's something that we're imposing to our customer or the customer's imposing a contract on us, review that language and push back where appropriate. And then once you're in contract and maintaining a property, there needs to be some level of you know reporting and documenting potential hazards that are on that property that probably coincide with your scope of work and then, you know, reporting that to the property manager building owner and then keeping record of that information for some time.
I think today there's so many different management systems that are now available to landscape companies so there could probably be a workflow created within one of those systems already and if it's something that you don't have access to a management system. And like you mentioned, John, we've all got cell phones. Is there the ability just to snap a quick picture, send it to your supervisor? I mean, it doesn't have to be, I guess, as daunting of a task as people might think initially. And again, this is to hopefully better protect your business, protect your customer, your insurance carrier, and the general public. If there's an issue on a property, we're trying to avoid injuries at all cost for everybody and so I think not only are you providing resources and tools for the landscape industry to better manage your own risk but in turn you're creating safer properties and hopefully minimizing the overall amount of activity that can that can happen. And is there anything that you would you would want to add to this or do you feel like we've covered it pretty well?
JF: I would just offer that the audience of landscape maintenance contractors understands the level of severity of these claims. Let me give you a couple of quick examples. Person trips on a raised piece of walkway, the person falls, breaks their fall with their hand and breaks their wrist. The wrist is a typical break that requires surgical intervention. That type of claim today is being settled for several hundred thousand dollars.
We've seen broken ankles where somebody steps into a depression or a hole in the grassy area. A broken ankle these days, that settlement will be several hundred thousand dollars. So there's never been a more important time to make sure that if you've signed a contract where you are going to be responsible for inspecting and reporting unsafe conditions, make sure that you have a procedure in place to do that to protect your insurance program for the future.
DG: You can kind of put into perspective like that. I think it helps our audience better understand the severity that's out there and how unpredictable that can be from the carrier standpoint in terms of when do I know this is coming in and do I have enough premium to offset that issue?
And I could see that's a challenge that your team is faced with and this is the reason why you're going to be looking for things like this that are going to elevate the landscape businesses overall risk management program and then in turn maybe there's opportunity to support a policy for them or work with them to some regard.
JF: Absolutely. And I would add that, you know, many of the types of repairs or service levels needed can actually create revenue for the landscape maintenance operator, be it the trimming of tree limbs or the removal of tree roots coming up in a grassy area that people could trip over. Irrigation systems that maybe need a little redesign because they're putting too much water on a street or a walkway, making that slippery. There's a number of things that the landscape contractor can actually get involved in and providing estimates to take care of these things. And there are other things like masonry work, paving, or maybe that's not something the contractor can do. They'd need to have the property owner find another subcontractor for that. But those are all opportunities and at the same time keeping your insurance program intact.
DG: John really well said we appreciate the time, the insight from your perspective is so critical right now for our customers but for the landscape industry in general and I think there's going to be a lot of takeaways from our audience today based on the information that you shared so we really appreciate you partnering up with the landscape industry and being here for us to share this information so everybody's in a better spot.
JF: Well, thank you, Drew. Appreciate having an opportunity to chat with your audience. And I'll just put in a little plug for Rancho Mesa. You guys are one of our very finest insurance agency partners. And we appreciate everything you do. Thank you.
DG: We appreciate that, John. Thank you so much.