CPA on “Your Work” and Insurance
Unbeknownst to many in the service and repair industry, the standard general liability coverage form written by ISO (Insurance Services Office) excludes property damage to your work. You can find the property damage exclusion on page 4 and 5 of the CG 00 01 12 07. Specifically take a close look at Exclusion j. “Property Damage”. You will see that paragraph 5 and 6 specifically remove coverage for property damage to “your work”. Whether you’re vacuuming, sweeping tile, or making equipment repairs, when you’re servicing a pool, the pool is likely “your work.”
The logic behind the exclusion is this, general liability insurance is not a warranty of your work. Further, the coverage is not designed to eliminate the inherent business risk one takes when they set out to become self-employed. As a business owner in the service and repair industry it is your responsibility to have expertise relating to the items you’re servicing and repairing.
So what is covered if not my work? Let’s look at some examples.
If you repair a heater and because of your repairs the heater is damaged and no longer functions properly, the standard ISO GL policy will not pay to replace the heater. Similarly, if you were to damage the plaster or tile in your customers’ pool by cleaning with abrasive products or even due to poor water chemistry, it is likely your insurance company would deny the claim based on the “your work” exclusion.
Here is an example of what the standard ISO GL policy would cover. Similarly you are performing repairs on a heater. While performing your repairs you failed to shut off the gas valve and there is a fire causing severe damage to your customers’ home. The legal expenses, cost of repairs to the home, and alternative housing while repairs are being completed would be covered up the per occurrence limit by the standard ISO GL policy.
You may be shocked while reading this. The Standard ISO GL policy does not cover items you’re servicing! That’s right. It is designed to cover bodily injury and property damage that occurs because of your work, but not your work itself. Again, this is standard policy language not manuscript (custom form which is typically intended to limit coverage). CPA wants you to know what your policy covers and more importantly what it doesn’t. If you’ve been with another industry association and tried to get a copy of your policy, I’m sure you struggled. It’s likely you never received the copy you requested. We don’t play that game at CPA. Every member receives a copy of their policy automatically and only a few days after purchasing coverage.
The CPA general liability policy is the Standard ISO GL policy and exclusion j. is on page 4 and 5 of your policy. So what do we do about this? Our policy has supplemental coverage give backs specific to the swimming pool service and repair industry. Among these endorsements are the acid wash supplement, popped pool enhancement, and on site or while in transit pollution coverage (commonly referred to as Hazmat). Additionally, I’m happy to inform you that we have a new coverage enhancement.
You now have the option of an endorsement that provides coverage for property damage that is “your work” up to $25,000 per occurrence and $50,000 aggregate (for any one policy term). This is another huge step forward in providing coverage that actually matters to your business. In true CPA form, we’ve made this endorsement optional. That’s right, we’re not attempting to drop a price increase on everybody. If you’d like to have the coverage on your policy, a coverage that no other association I’m aware of has, the monthly rate will be $79. If you want to continue at $59.00 per month, you’re welcome to reject the coverage and continue at the same rate of $59. For those of you who have employees, the cost to enhance your policy is simply $200 plus taxes and fees annually. Simple!
Here’s a little tip I’d like to share with you. Your customers would be happy to know that you have this coverage. After all, General Liability is designed to pay for third party damages (also your defense costs). Would your customer want to know that your policy goes above industry standard and would cover up to $25,000 if you damaged their pool? I think so! I think they might even be willing to pay for it!
If you have 50 pools in your route, to add $20 per month in revenue and pay for this endorsement you would need to raise your rates by $0.40 per customer/per month.
If you have 70 pools in your route, raise your rates by $0.29 per customer/per month and you have the revenue to pay for this endorsement.
If you have 90 pools in your route, raise your rates by $0.22 per customer/ per month and the revenue is there.
I don’t intend to over simplify this and I know some customers may not follow along with this. Most will. Most will not even require an explanation. It is highly unlikely that you would ever lose an account over less than $0.50 per month.
This isn’t a faulty workmanship endorsement which typically only pays for materials on a limited coverage basis. This is the real deal! Real coverage for property damage that is “your work”. Pat and I went to bat for you. We’re committed to bringing you the best insurance products in the industry. We’re also committed to maintaining the lowest rates in the industry. Options are important, flexibility is important. We’re not trying to jam all our members into the same box. Maybe that’s why you joined CPA in the first place? Especially in the event you have employees performing work on your behalf, strongly consider adding this coverage.
I recognize some of what I’ve written here may be confusing and most of you are not insurance professionals. If you have questions or concerns please contact Pat or I for more details. We’re here to help.