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Commercial Snow Insurance: The Disappearance of Small Snow Removal Contractors

Snow plow pushing snow pile

As a commercial property owner, are you struggling to find a commercial snow & ice management contractor for your buildings? In recent years many small and medium contractors have dropped out of the snow industry due to multiple contributing factors.

Insurance continues to be one of the top challenges for the snow removal industry.  Labour, fuel, salt and equipment costs are rising rapidly, but failure to attain adequate insurance at a reasonable (or any) cost is something that can shut down a snow management company instantly.  Personal injury lawyers have targeted this industry as it is very difficult to defend.  The Homeowners and Occupiers Act states that a building owner (or contractor) must do what is reasonable to keep a property reasonably safe.

The challenge is that during a storm, contractors try to execute a perfect plan using very imperfect information.  Weather forecasts are rarely perfect and are sometimes miles off the mark.  For example, a 1C degree error in forecasting temperature can mean the difference between a rainstorm and a freezing rain event.  However, in the case of a claim, only the records of what happened are usually available.  So, contractors are judged against what actually happened, not what was expected or forecasted.  For people unfamiliar with the snow management industry, a contractor can appear to be negligent when that was not the case at all.  In essence, we are judged against a standard of perfection, not reasonableness.  Large settlements have been paid out as a result, and insurance companies have pulled out of the market as it is simply “too risky”.  The very few who have remained charge high premiums, and exorbitant deductibles – $50k to $100k per claim are becoming normal!  In an increasing number of cases, insurance is not offered to contractors at all!

Two men looking over a insurance document

Beyond the actual risk profile of the industry, insurance companies are also impacted by disasters occurring anywhere they may have exposure, as well as the performance of stock markets.  Insurers invest the premiums they receive in financial markets and expect the returns to help generate their profits.  When markets go down – as they have recently- this revenue is reduced, so they need to make it up by increasing premiums.

Many small and medium contractors have dropped out of the industry due to these costs or may not have even received an option to purchase a policy.  Virtually no new snow management companies have entered the market in the past couple of years.

As a commercial building owner/manager, it is important to ensure that your contractor has adequate coverage and can financially withstand the cost of a deductible or two.  If not, you may be left mid-winter without snow removal services.  It’s important to vet your contractor before the snow season begins, as replacing a contractor in mid-season is usually very difficult.

MPS has insulated itself from these problems by forming a “self-insured retention” group with other like-minded contractors.  Through the use of best practices in training, equipment maintenance, record keeping, and claims management, we are able to effectively manage and defend claims.  This has allowed us to secure stable and sustainable insurance coverage.

Reach out today for your Commercial Snow Removal Quote!

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