Professional Liability for Professional Arborists

by | Jul 9, 2019 | Risk Management | 0 comments

Professional Liability for Professional Arborists

On August 15th, 2017 a woman was walking through New York’s Central Park with her three sons when an Elm tree suddenly uprooted and fell on top of them. The woman, who was knocked unconscious, was holding an infant with her two sons in a stroller. Fortunately, the entire family was taken to the hospital and treated with non-life threatening injuries. Story over right? Well, almost a year and a half later the mother filed a two hundred million dollar ($200,000,000) lawsuit against New York City, Central Park Conservatory, and all private contractors that had done work on the tree in the past.

Two hundred million is certainly an extreme case, however in 2012 a lawsuit settled for four million dollars ($4,000,000) after a single branch fell and killed someone in New York City. Can you imagine being brought into a suit for a tree you worked on years ago? Oh, by the way, you better hope you have the right insurance coverage for defense costs and damages!

We all know insurance coverage is needed for bodily injury or property damage caused while you’re on the jobsite. This comes from your General Liability policy. However, with any tree job, there come exposures that are not going to be covered under the General Liability and will require Professional Liability specific to tree care operations. Here are a few common reasons every tree service should have Professional Liability.

Work On The Tree Itself

Think about the scenario discussed above. Wherever your crews are working they are responsible for the work being performed. Everything from working on the correct tree, using proper pruning techniques, and assessing any future tree issues are all things every tree crew does every day. If your crew fails at addressing any of these concerns, you may be exposed to a faulty workmanship claim which is usually excluded under your General Liability policy. That’s right excluded! For these exposures you must purchase Professional Liability specific to tree care operations.

Work In Area/On Nearby Trees

Believe it or not, you can be held liable for damage caused by a failed tree that you weren’t even asked to do work on. Professional tree care companies, especially those that employ Certified Arborists and TRAQ arborists, have a responsibility as soon as they step on the jobsite to give notice of any trees that could be potentially harmful. Simply put, the property owner hires an arborist because they have a higher level of understanding and awareness about trees, than the property owner. If an arborist misses something the tree care company could be held liable. Your General Liability policy certainly will not afford you protection for any lawsuit where you did not touch a tree. Professional liability is the only way to find coverage for this.

Consulting

For the arborists that only perform consulting operations, you obviously have the highest need for Professional Liability coverage as your work is all verbal/written. General Liability is for physical work done to trees, not for advice given. Whether it is consulting on one tree with a homeowner, or developing a tree management plan for an entire municipality, or acting as an expert witness in court, you’ll want to make sure you have Professional Liability policy to cover any mistakes. Also, many insurance policies are very specific to what operations they cover so please make sure everything you do is listed to avoid any potential gaps in your protection.

Training

Similar to the expert witness operations, training is often not included under a standard Professional Liability policy. Many of our clients will teach other arborists at either conferences or on-site with entire companies. From OSHA compliance training, to any of the ISA or TCIA workshops, as well as custom climbing/rigging course, there is an additional coverage you must have to protect yourself; Educator’s Errors and Omissions. This would provide coverage if you were named in a lawsuit for poor advice that led to injury or property damage.

To conclude, everybody in the arboriculture world needs some form of Professional Liability coverage either added onto their General Liability coverage or as a separate policy. Talk about this with your insurance agent to make sure you know what potential gaps in coverage exist for your business today.

If you are concerned about some of your operations not being covered under your current policy, contact ArboRisk for a free coverage review. For more in depth help, check out ArboRisk’s New Heights Thrive Package – the ArboRisk team will help you take a deep dive on not only your insurance but also your business operations, safety culture, sales and marketing techniques, and more! Stay safe!

Frequency vs. Severity of Insurance Claims

by | Jun 11, 2019 | Risk Management | 0 comments

Frequency Vs. Severity of Insurance Claims

“I have insurance, I’ll just file a claim.”

Have you heard yourself saying that before? I’m sure you have at least thought it in the past. Unfortunately, a common misconception people have about insurance is that small claims will not affect them since the insurance company is still taking in more money from the premiums that are paid than the amount they are paying out in claims.

In reality, when comparing two businesses against each other, one that has multiple small claims versus one that has had only one large claim, every insurance company will look more favorably upon the business with only one claim. Why is that?

When assessing the risk of a business, insurance companies look at three factors when it comes to their claims; the cause(s) of loss, the frequency of similar incidents and the severity of each. Claims are typically categorize them into these four classifications:

1. Low Frequency – Low Severity
2. High Frequency – Low Severity
3. High Frequency – High Severity
4. Low Frequency – High Severity

With these four classifications in mind, the business owner can decide how to best handle losses to be viewed as a better insurance risk to the insurance companies.

Obviously, we know, the more favorable you look to an insurance company, the lower the premiums you will pay. So the business owner has four different ways to respond. Pssst, this is called Risk Management.

1. Accept the risk and budget for the impact of it
2. Prevent the risk by using loss control or safety measures
3. Avoid the risk all together
4. Transfer the risk to someone else

As you have probably figured out, insurance is for risks that have Low Frequency – High Severity and the reason we need to transfer the financial burden to someone else is because the risks are not predictable.

They can be things like a tornado taking out your shop, or an employee that is struck by a tree while on the jobsite. These risks would lead to claims that could have a huge financial impact on your business and potentially even lead you to close up shop. Insurance companies are comfortable covering these risks due to the law of large numbers, an insurance term meaning that as they add more policyholders, the probability of each one having a severe claim goes down.

What worries the insurance companies the most, is when there are a high frequency of low severity claims. This is simply because the more small claims you have the likelihood of a large claim happening is much greater.

For example, if a tree service has a large number of small fender benders, it likely means safe driving practices aren’t in place, their vehicles are not well maintained or they are employing reckless drivers. Over time, it is inevitable that a larger auto claim will occur.

Consider workers’ comp as well. Does your business have more than a couple laceration claims in the last couple years? Often times we’ll see laceration claims close for around $3,000, but it doesn’t take much more for a small laceration to turn into a permanent partial disability claim where a great employee loses a finger or even hand. And if chainsaws are causing issues, might there be other body parts with some exposure as well?

Telling your team you’ve seen an uptick in claims and explaining the repercussions is a great place to start. Also consider areas like your on-boarding process, safety meetings, and post-accident discussions. Get creative with this as each company likely has different experiences but you should be able to narrow down your problem areas based on previous claims or close calls. Refer to a previous article that I wrote titled “How To Get The Most Out of Your Safety Committee”, as this could be a job for your safety committee to take a deeper look at.

Now you know that when insurance companies asks for loss runs and sees a high frequency of claims, they are not only assuming you will continue to have more claims, they are also assuming that you are likely to have a much larger claim in the near future.

Work with your insurance agent to review your claim history and see if you notice any trends. It helps to write out which type of risks you want to pay attention to with loss control and safety training, which risks you’ll cover by paying out of pocket, and which risks you want to transfer to insurance. Look at that, you just created a Risk Management Plan!

And as always, feel free to reach out to an ArboRisk team member if you have any questions on how to best minimize your exposures to loss and ultimately secure the most competitive insurance rates!

Written by: Malcolm Jeffris, CTSP

Will You Watch Out for My Safety?

by | May 7, 2019 | Risk Management | 0 comments

Will You Watch Out For My Safety?

“You don’t have to tell me that, I know what I’m doing.”

How many times have you caught yourself saying that to someone who is just trying to help?

I know I have done that more often than I’d like to admit. Especially when you are in a leadership position, it can be challenging to accept advice from one of your subordinates. However, this is the exact opposite reaction you should have if you want to promote a culture of trust and open communication within your company.

At TCIA’s 2019 Winter Management Conference, John Drebinger spoke on how safety is a benefit for your employees and how the owner or crew leader’s attitude plays the largest factor in the success of building a safety culture. For a company to truly build a great culture, all employees must feel comfortable to speak up when they see something that doesn’t seem right. If the owner or crew leader shuts down an employee by saying that they know what they should be doing, the chances of that employee ever saying something again are slim. As soon as that communication breaks down, your culture of mutual respect within your company takes a major hit and preventable accidents may occur.

There are many reasons, why people don’t say something including:

They don’t think something will happen.
They are uncomfortable speaking up.
They do not know how to point out an unsafe situation.
So what is the best way to avoid this breakdown in communication? Train yourself and your team members on how to bring up a safety concern as well as how to accept safety criticism from anyone on the team.

At your next safety meeting, start by asking individuals directly if they will look out for your safety. Speak directly at 3 or 4 of your team members to drive home the point that everyone should be looking out for each other. “John, will you look out for my safety? Bob, will you look out for my safety?”. And so on.

Giving your employees the authority to say something that could prevent an accident from happening will dramatically change the safety culture of your organization.

After you have given the authority to look out for everyone’s safety, provide your team with a few simple ways that employees can point out safety concerns comfortably.

“As you know” – One of the easiest ways for any team member to address another is to begin with this phrase. This technique doesn’t threaten the intelligence of the worker, but reminds them that they are working unsafely. Ex: As you know, you should be wearing your chaps, even for one small cut.

“I’m new, why are you doing it that way?” – Asking for advice is actually a great, innocent way of getting your point across to a veteran employee that their work practice is unsafe. It will stop them enough to realize they are setting a bad example and allow for a small moment of training between the two. Ex: Since I’m new to your crew, why did you set up the chipper in that manner?

“This one time, I…” – State how you had a close call by doing a similar unsafe act. Relating to your team member by stating that you have done the same unsafe act, but were lucky enough to not have an accident is a powerful way of helping that individual. Ex: This one time, I didn’t put on the chain break when bucking a log and my chain got caught in my chaps as I moved to the next limb.

After you have given a few examples of how to point out an unsafe act, you have to talk about the proper way to accept criticism regardless of who is giving it to you. Remember, the main reason you want a safe workplace is so everyone will make it home each night. Explain that checking your ego and saying thank you is much easier than taking an ambulance ride to the emergency room. Also, acknowledging that it may have been difficult for that team member to say something goes a long way to ensure they feel comfortable to say something again in the future.

Foster a culture of gratitude within your company by setting a great example for your team and training everyone on how to address and accept the advice instead of shutting it down.

For help building the best safety culture possible, contact the ArboRisk team today!

Written by: Eric Petersen

Avoid Work Comp Audit Aggravation

by | Mar 12, 2019 | Risk Management | 0 comments

Avoid Work Comp Audit Aggravation

If I could do away with one thing with Work Comp insurance, it would be to eliminate the audit process! The mere word “audit” makes my skin crawl. Unfortunately, I cannot wave a magic wand to rid ourselves of the Work Comp audit, so here is some helpful information to make your audit go as smoothly as possible.

First of all, the purpose of the audit is for the Work Comp insurance company to receive the appropriate premium for the exposure that your business has. If you have more employees, you have more exposure to a workplace injury. Because your employee situation can change drastically throughout the year, looking back at the prior year is the only way for the insurance company to gain the proper premium. They do this by utilizing an audit. So if your audit shows that you had more payroll than estimated, you’ll owe more premium, if you had less payroll, you’ll get the respective premium back.

Understanding the timeline of Work Comp policy is critical. Here are the basic milestones for your policy:

Projected annual payroll is given to the insurance company to generate estimated premium.
You pay premium throughout policy year based on payroll estimate.
Your policy renews using prior year’s estimated payroll amount.
A Work Comp audit is required to adjust prior term premium.

There are four key points that I want you to be aware of regarding audits:

Non-Compliance – Audits are required by the insurance company and failure to complete them will result in cancellation of your current policy and any future policies until the audit is completed.

Class Codes – No matter how your policy was set up at the beginning of the policy, the audit will ultimately determine the classifications of all employees. To get the proper class codes, make sure:
– To have specific job descriptions for everyone outline their exact job duties.
– To keep separate payroll records for the different jobs performed by your employees.

Sub-Contractors – Sub-Contractors will be considered employees, unless you have a certificate of Work Comp insurance from them showing active coverage during the dates they worked for you.

Payroll Adjustments – You don’t have to wait for an audit to adjust your payroll estimate. This can be done at any time during the policy year at your request or it may happen automatically when the insurance company adjusts the payroll on your current policy to match the prior year’s audited payroll.

Because Work Comp audits are a source of frustration for every tree care company, here are my tips for being prepared for your audit.

Designate a friendly, knowledgeable individual to meet with the auditor. This person should know what each employee does for the organization. If an employee’s job duties are unclear to the auditor, they will assign the highest code to that individual.

Prepare payroll records by classification for the policy period. Make sure to have overtime pay in a separate category so the auditor can discount it back to straight time.

Show your officer payroll separately, as the officers payroll is capped and some companies have elected to exclude officers from coverage altogether.

Prepare a summary statement of the payrolls by classification.

If you use subcontractors or independent contractors, have Certificates of Insurance copied for the auditor verifying the subcontractor/independent contractor carries their own Work Comp insurance.

Have documentation of how you arrived at your payroll numbers available, but not copied, for the auditor. Often the auditor will only take your summary and a few pages of your documentation that the auditor will ask you to copy for them.

Talk to appropriate employees about attire and duties for the day of the audit.

Stay with the auditor at all times. The auditor should not be allowed to wander around the premises and question employees about their duties.

Ask the auditor to send you a copy of their worksheets. Get auditor’s business card so you can follow up for the worksheets.
Confirm the payroll and classifications from the audit worksheets as soon as possible to avoid any mistakes.

We have created a simple audit checklist to help minimize the audit aggravation. If you’d like a copy, contact me at [email protected].

Written by: Eric Petersen

3 Critical Cyber Security Measures

by | Jan 8, 2019 | Risk Management | 0 comments

3 Critical Cyber Security Measures

“Cyber Security? Only mega corporations like Target and Home Depot have to worry about that. I’m just a small tree service. I don’t have anything that hackers would want.”

Be honest, have you ever found yourself saying that? Chances are you have and, naturally, this article will tell you why you need to pay attention to what is going on in the cyber security world. Last year, I attended a Cyber Risk Seminar and learned that 69% of data breaches occur from a negligent insider (or former insider). That means someone inside your company either clicked a bad link, emailed a virus or unknowingly allowed a hacker into your computer system.

Before discussing the ways to minimize your cyber liability, I want to highlight a few areas of exposure that every tree service has. As with any exposure to loss, there are internal and external risks that a business faces.

External Cyber Risks

1. Transmitting a Virus to a Customer/Vendor – Tree care companies rely on email to communicate with their customers and vendors. Email is the most efficient method of communication and also presents the easiest way for your company to be liable for a cyber breach. If one of your employees sends an email that contains a virus to a customer or, worse, your entire customer database, you could be facing a huge unexpected expense. It costs anywhere between $100 – $350 to remove a virus from an infected computer and that cost does not include if any personal data was compromised or any business shutdown occurred because of it.
2. Customer’s Personal Data – Every tree service has some personal information from their customers. Names, addresses, phone numbers, email addresses and credit card numbers are all considered Personally Identifiable Information (PII) and is therefore information that must be protected from a data breach. If a hacker gets into your computer system and gains access to this basic customer information, you will be responsible for notifying the customer of the breach and providing credit monitoring for one year.
In 2016 the average cost for a data breach was $158 per record – How much would a breach cost your business at that price point?

Internal Cyber Risks

1. Employee’s Personal Data – When hiring someone onto your team, there is a lot of personal information that you gather – Social Security numbers, birthdays and driver’s license numbers, to name a few. Do you have a direct deposit payroll system set up? If so, your employee’s bank information is in your system. As the business owner, you clearly have a responsibility to protect your employee’s data. What would happen to your employee loyalty if you failed at keeping their information safe?
2. Business’ Computer System – Interruptions seem to happen fairly often when using technology for your business. Sometimes the internet goes out due to a cut wire down the street. Your phone system may suffer a break in service due to something on the provider’s end. Those are out of your control, however, what you can do something about is your internal business system. Is your computer network backed up in the cloud or off-site? What would happen if your system got hacked and held for ransom from a cyber-attack?

Now that you know the common cyber exposures that all tree services face, here are three areas to focus on to reduce the chance of a cyber liability event. Implementing these changes can reduce your chances of a breach by almost 70%!

1. Inbox Security – Studies have shown that 93% of all computer hacks begins with email phishing. Email phishing is a tactic that hackers use to get the email user to click an infected link embedded in an email to gain access to their system. These can be specific to an individual and look VERY similar to an email that you would get. I’m sure you have received these before but may not have even realized it – an email from UPS about a package delivery or that your Amazon order needs more information. They look very real and ask you to take action by clicking the link included in the email to resolve the issue. Once you click the link, your system is compromised. Working with a proactive IT company will help you get the proper email controls in place to limit the phishing attempts on your employees.
2. Browser Security – The next part of cyber security is enabling the proper security features on your internet browsers. This can again be controlled by your IT firm and will help you restrict access to potentially damaging websites. We’ve all heard stories of how one employee used a work computer to search for something that wasn’t work related and the shady website that was viewed infected the computer and it spread to the other networked computers. Tighten up what sites can be opened and this exposure disappears.
3. Employee Behavior – Training employees on what to look for from a phishing attack or questionable website is the best way to limit the accidental “oops, I shouldn’t have opened that email.” In our agency, we signed our employees up for a six part training on email phishing. As the owner of my company, I need to do whatever I can to make sure my team understands how these schemes work so we don’t cause a data breach.

The world of cyber security can be overwhelming, however, if you focus on these three simple areas, you will drastically limit your exposure to a crippling data breach.

For more information on how to properly protect your business against a cyber event, contact our agency.

Written by: Eric Petersen

Is Your Safety Program Working?

by | Dec 5, 2018 | Risk Management | 0 comments

Is Your Safety Program Working?

As a risk manager for the tree care industry, I am often asked, “how does a tree service make sure their safety program is working?” Because of this common question, I want to share three simple ways that you can internally audit your safety program to ensure you are doing all you can to get every employee home safe at night.

Are your employees able to explain what to do?

An effective safety program will teach your team members exactly what to do in case of an injury. Simply ask employees from all departments to describe the steps to take. They should know who to call, which clinic they need to go to depending on location, and what forms to fill out as soon as the injury happens. Of course, if they cannot explain what to do during a non-emergency situation, they won’t know during a panic-filled time of injury. Make this the topic at your next safety meeting to train everyone on the procedure for an injury. Have your procedure written down, and kept at all locations and in each vehicle for an emergency.

Can you prove your program is being implemented?

Documentation is a key component of an effective safety program. Whether it is for OSHA or to obtain a lower insurance rates, being able to prove that that your safety program actually exists is the goal. You should have employees sign that they acknowledge and understand the safety program and employee handbook, as well as attendance sheets for the weekly or bi-weekly safety meetings. Be sure to note the topics on the attendance sheets as well. This also helps you recognize if an employee is not being properly trained on a piece of equipment or operational service that you provide.

Numbers Talk!

Have a safety committee member be in charge of monitoring your data. A simple Excel document is a great way to track important statistics like; number of incidents, number of different employees injured, number of missed work days, etc. These numbers should be reviewed monthly or quarterly at the very least. Make note to monitor both positive and negative trends as you’ll want to reward a strong safety environment while addressing any obvious issues.

Remember, even TCIA Accredited companies have serious injuries and fatalities that could have been prevented. Don’t let your safety culture get stale and ineffective. Use these three ideas to monitor the strength of your program so you know when and how to improve it.

Written by: Malcolm Jeffris, CTSP