Ohio Landscapers: how new ODA guidelines have a major impact on your insurance

Posted by Matt Simon on Mar 24, 2016

The Ohio Department of Agriculture (ODA) recently amended its guidelines for every pesticide business operating in the State of Ohio.

If you're in the landscaping business, or just have your pesticide license, you need to understand this significant change.

And prepare yourself for the fact that your current business insurance VERY LIKELY DOES NOT comply with the new law.

Before we get to the change, it’s helpful to understand how the law was previously written.

According to the older version of this Ohio law:

Every Pesticide Business issued a pesticide business license shall have in force, for the term of the license, a comprehensive general liability insurance policy and, either a separate professional liability insurance policy or an endorsement, covering liability arising from the application of pesticides in each of the specific user categories in which pesticide applicators employed by the business are licensed.

Based on this language, there was little to be concerned about.  Nearly all landscaping businesses in Ohio that hold a pesticide license already have a General Liability Insurance policy, and the endorsement covering the application of pesticides was readily available.

However, there was a major change; below is the new language:

Every pesticide business shall have in force a commercial general liability insurance policy, and either a separate professional liability insurance policy or an endorsement covering the properties under the care, custody, and control of the pesticide application business as it relates to the application of pesticides, including but not limited to the damage to the actual properties the pesticide business is treating or working on…

The language causing major problems for landscaping businesses throughout Ohio, and any business holding a pesticide license, is this:

…covering the properties under the care, custody, and control of the pesticide application business…

Why such a problem?

The standard Commercial General Liability Insurance policy has an exclusion for damage you cause to your own work (often referred to as faulty workmanship)… essentially insurance companies don’t want to be in the business of providing a warranty on the work you perform.

If you’re on a jobsite and accidentally run your mower into a sign on your client's property, no problem.  Your General Liability policy provides property damage coverage since the sign was not part of 'your work,' you could file the claim under your policy.

However, if you apply the wrong pesticide mixture at this same client’s property, resulting in extensive damage to the landscaping, your standard Commercial General Liability policy will not cover you because this is considered ‘your work’, or in other terms, property that’s in your ‘care, custody and control.’

Now for those business owners intimately familiar with their commercial insurance policy, you’re likely saying ‘just add an endorsement to my policy to provide the needed coverage.’

Not so fast.

As of the date this article was published, we’re only aware of two insurance companies in the entire State of Ohio that are willing to provide this coverage.

For any responsible business owner that currently has a pesticide license, this creates a major problem if you’re not insured with one of these two insurance companies.

And even if you’re insured with one of the two companies providing the coverage, there’s no guarantee that you have the coverage you need.

Your standard General Liability Insurance policy WILL NOT provide you with the coverage you need, so if you haven’t endorsed your policy, you might want to move that to the top of your to-do list.

Curious about the requirements?

According to the new law:

The policies and endorsements shall:

(1) Provide coverage for each registered location associated with the pesticide business;

(2) Provide coverage for bodily injury, property damage, products, and completed operations due to the application of pesticides at the location applied and for third party claims; and

(3) Contain the following minimum limits of insurance:

(a) Three hundred thousand dollars per policy general aggregate;

(b) Three hundred thousand dollars per occurrence limit; and

(c) Three hundred thousand dollars products and completed operations aggregate

Obtaining coverage for bodily injury, property damage, products and completed operations is no problem.  If you’ve had a General Liability policy for your business, there’s a very good chance you’ve had this coverage for as long as you’ve been purchasing your policy.

Where you’re going to run into problems is when you need to show proof that you have $300,000 of coverage for the properties under your care, custody and control – the properties you’re servicing for your clients.

What do you need to do?

  1. You need to make sure you’re insured by one of the insurance companies in Ohio willing to provide the needed coverage
  2. You need to make sure even if you’re insured with one of the insurance companies that provides the coverage, that your policy has actually been endorsed to include the coverage

So what about the cost?

Right now, we’re seeing the cost to add the necessary $300,000 limit of coverage for property in your care, custody or control range from $500 to $1,500 per year.

The good news is, we can very likely help you find ways to absorb the additional premium for this new requirement.

How?

  • We can help you identify & eliminate unnecessary coverage options currently included in your policy
  • You can increase deductibles for certain types of claims, or even select a higher deductible for the new ‘care, custody & control coverage’ you’re being required to carry
  • You can self-insure (elect not to pay for insurance at all) where it makes sense.  Note: it doesn’t make sense to self-insure the care, custody & control exposure since this requirement is a law in Ohio.

Consequences for noncompliance

Thinking about taking the chance and foregoing the new requirements?  That could end up being an extremely costly mistake.

Why?

  • If you’re found to be noncompliant with the new financial responsibility requirements, your license is immediately suspended.
  • If you experience a claim only to find out that you didn’t have the coverage you needed, your license is immediately suspended.
  • Even if your insurance agent provided you with a Certificate of Insurance showing that you had the coverage, when in fact you didn’t, your license would still be suspended.

Conclusion

With a nearly unnoticed, seemingly minor change made by the Ohio Department of Agriculture, this new law is having a major impact on landscaping businesses throughout Ohio.

Because of this change, nearly all landscaping businesses now have a huge gap in their insurance coverage, and are unknowingly violating the law.

And with such a limited number of insurance companies willing to provide the necessary coverage so that Ohio landscapers can be compliant with the law, very few Insurance Advisors are equipped to help.

We happen to be one of the Insurance Advisors that can help.

  • We know about the change the Ohio Department of Agriculture made
  • We’re familiar with its new requirements, and how it impacts anyone with a pesticide license
  • And more importantly, we’ve been working with Ohio landscapers since 1920 so we know the industry, and we have a history of protecting landscaping businesses throughout Ohio

The time to address this situation is long before a claim ever occurs.  If you bring us in now, we can very likely ensure you’re in compliance, without causing a major impact to your bottom line.

The alternative is to wait until a claim occurs.  That’s probably a bad time to find out that not only do you not have coverage, but you’re also susceptible to license suspension, potential fines & penalties, and massive compliance requirements that must be met before your business can reopen.

To learn more, and find out whether you’re compliant, give us a call.  Or, if you need coverage immediately, Request a Proposal and we’ll get to work right away.

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Category: Business Insurance (3), General Liability Insurance (3), Landscaping Insurance (3)