James Wallace of Wallace Risk Solutions provides a helpful recap of the various insurances on offer to pest managers – what they are, and what they mean if you ever need to make a claim.
Each industry has a different exposure to risk, and the pest control industry is no different. A pest manager with his or her own business is potentially exposed to two kinds of risk: general and personal. Do you know the various kinds of insurance on offer that will ensure that you and your business are fully covered?
The size of your business, number of employees, the type of work you undertake, and your business and personal debt levels are all factors to consider in relation to the kind of insurance cover required. Below is a short summary of each type of cover worth considering.
Public Liability relates to any claims that may arise from pest control activities at your client’s premises, in public spaces, or on your own premises.
For example, a customer could make a claim if they came into contact with toxic chemicals, or if they entered the premises while it was being fumigated, resulting in their exposure to those chemicals.
The incorrect use of chemicals/pesticides can also cause damage to a customer’s property, or an injury might occur, caused by your tools, equipment or chemicals/pesticides. Pest managers also have an exposure to environmental liability relating to waste, storage, mixing and use of chemicals.
These are just some examples of when a pest manager would need to rely on the cover provided by his or her Public Liability insurance.
Products Liability relates to claims made as a result of inappropriate use or handling of chemicals. It is likely that you will be responsible for the concentration, mixing and quantity of chemicals prior to their application. Errors can cause damage to stock, property, or be ineffective, possibly resulting in failure to eradicate the pest, which in turn may cause property damage. Pest managers also have an exposure regarding the sale of products. Although low risk, typically you would not be held liable, but defence costs may be incurred.
This cover is important for business owners who give their customers professional advice. It is particularly relevant if you are conducting timber pest or termite inspections, issuing reports, making recommendations, or applying and selecting chemicals.
Claims mainly arise from inaccurate information being reported, as well as inappropriate treatments and recommendations being made. Deviation in work practices, poor work habits, lack of compliant documentation, and lack of understanding of your obligations can lead to you being exposed. Other key areas of exposure are staff training and qualifications, use of sub-contractors, and quality control.
Management Liability policies cover the exposures and risks of managing your business. Cover such as Directors and Officers (D&O), and tax and employment practices liability should be considered, particularly for larger businesses. As well as facing corporate liability, company directors and officers can also be held personally liable.
The owners, shareholders, and other financiers of your business expect an ongoing income to cover financing costs, business operation costs, and an acceptable level of profit. As such, profit and ongoing expenses including payroll, management and financing costs should be insured. The type of insurance that covers these kinds of events is called Business Interruption Insurance.
Life Risk – sole trader
If you are unable to work due to illness or injury, your income will stop. Protection for sickness and accident is important, as it can continue to cover living expenses (e.g. mortgage payments, lease payments) whilst you are not working. The insurance benefit is paid monthly.
Life insurance and Total and Permanent Disability (TPD) are lump sum payouts to repay any loans and to cover present and future loss of income for your family.
Life Risk – business owner
You and your staff are key people in your business; together, you make the business productive and profitable. The loss of a key person due to illness, injury or death may impact the productivity and profitability of your business. Policies for sickness, injury, premature death, and Total and Permanent Disability and Trauma should be considered to ensure that both your business and your personal financial needs are protected.
As well as those listed above, other exposures that you should consider insuring against are fire and peril, and general property, depending on whether you are operating out of a commercial premises, or your own home/vehicle.
Of course, you should also be aware of your statutory obligations with coverage such as workers’ compensation.
James Wallace, Wallace Risk Solutions