Managing risk as a landscaper is about more than just having the right insurance, explains Ben Rickard
Having the correct insurance in place is a good first step to managing risk, but it doesn’t end there. Preventing physical injury and mishandling of chemicals, such as fertilisers and sprays, must be managed by good training and safety procedures.
The same applies when it comes to managing customer relationships. Written contracts are essential for avoiding misunderstandings, documenting the agreed scope of work and managing any disputes. This also includes ensuring that variations are agreed in writing.
These are just a few examples of hazards that need to be managed as part of a broader risk management plan, which may also include having the right insurance cover in place. This includes:
1. Public/General/Broadform Liability
This covers your liability for accidental damage to someone else’s property. For example, concrete splashes staining existing cladding or joinery, or heavy equipment damaging existing concrete paths and retaining.
One common pitfall to be aware of is hitting underground services when digging holes or trenches. This is covered, usually with a higher excess, but only if the appropriate measures were taken to identify the location of any services prior to digging. This may include needing to dig manually rather than using an excavator if working near such services.
Pools are another area that need to be managed very carefully, as insurance may not cover liability issues related to their construction.
Lastly, be sure that the activities described on your policy reflect the actual work that you are doing. Landscaping construction services typically include landforming and the provision of retaining walls and paths, decks, fences, ponds and similar structures. If you are doing any work outside of these activities make sure your insurer is aware of it, or it may not be covered.
2. Statutory Liability
This covers your liability for fines and penalties imposed under legislation. Most commonly, this relates to prosecutions under health and safety legislation. This could stem from inadequately fenced retaining walls or decks or other potentially hazardous areas of the site. While the actual fine in these cases can’t be insured, the policy covers legal defence costs and any reparations awarded to an injured party.
Another issue is the improper disposal of waste or contaminated site run-off that enters a local waterway. These are a breach of the Resource Management Act, with associated heavy fines.
Lastly, there are substantial fines for performing work that requires a building consent without first obtaining one.
3. Employers Liability and Employment Disputes Liability
A landscaping business is no different from any other in respect of its obligations to employees. Allegations of unfair dismissal, harassment and bullying are increasing. The cost of defending these claims to the Employment Relations Authority, including any compensation awarded, can be insured. The same goes for claims of mental illness, anxiety, depression and stress brought on by the job.
For workers exposed for long periods to the sun, the risk of melanoma increases – and this is not covered by ACC. The business could be liable if it has not adequately managed this risk for staff, such as by the provision of the appropriate PPE, hats, long sleeves, sunscreen etc.
4. Contract Works Insurance
This covers accidental damage or loss to building work, including by theft, storm, subsidence or flood. Often not even considered by landscapers, if this cover hasn’t been arranged and there is damage to the works under construction, a substantial loss may have to be borne by the landscaper.
Often, if the work involves an existing structure, such as the addition of a deck, fencing, retaining or landscaping around a house, this cover should be arranged by the building owner with their current insurer. It is a good idea for landscapers to ensure that this has been done, which will avoid any problems later if it hasn’t been and there is an issue. It should be a standard condition of your contract for this cover to be arranged.
If the contract involves standalone work, such as a sleepout or a freestanding deck, pergola or substantial retaining works, landscapers may be able to arrange the cover separately.
5. Design Liability
If your role includes landscape design then consider professional indemnity insurance. This covers liability for errors in the design that require the client to be compensated for their loss. For instance, encroaching on neighbouring property boundaries or errors in the calculations for finished floor levels or other cut depths when excavating.
6. Vehicles, trailers, tools and equipment
Insuring your assets for damage or theft is essential to protecting their value. Most commercial vehicle policies are based on their market value at the time of the loss. Some will pay the lesser of the sum insured on the policy or a valuation obtained by the insurer at the time the vehicle is written off or stolen. Others will pay the market value regardless of the sum insured on the policy.
You can also get an 'agreed value' policy, which pays the sum insured stated on the policy. However, some insurers still have limitations if that value exceeds the market value by a certain amount, and they will typically require a written valuation to set an agreed value.
Trailers should be insured as vehicles (since they have to be road registered). These are a popular target for thieves, so should be secured with wheel and/or towbar locks and perhaps even GPS tracking. Tools and equipment for landscapers are generally best covered under a 'mobile business assets' policy, which will insure them for their full replacement (new for old) value. This can cover power tools and other equipment used to perform your job. A material damage policy is another type of cover commonly used to insure these assets. Anything propelled on wheels though, such as mowers, should be insured under a vehicle or contractors plant and machinery policy.
7. Income Protection, Trauma
Most of us rely on our own efforts to earn an income. If we get injured, ACC should replace our income until we are able to get back to work. However, experiences with ACC are extremely mixed and they typically only pay 80% of the assessed pre-injury income. For contractors, where income can fluctuate, this can be a problem. ACC also doesn’t cover non-accident illness, such as cancer, depression, kidney failure etc. Income protection insurance assists in these situations. Also consider trauma cover if you require a major surgery, or health insurance to cover medical costs.
This article is not exhaustive and you should conduct your own assessment of your specific needs, perhaps along with an insurance/risk management professional adviser. There are other policies to cover different risks. Individual policy wordings from different insurers may vary. You should refer to the specific exclusions in your own policy wordings and discuss them with your insurance adviser if you are unsure.
Builtin are New Zealand’s Trade Insurance Experts.For more information visit builtininsurance.co.nz, email Ben Rickard at ben@builtin.co.nz or call him on 0800 BUILTIN.