Careful Hiring and Training – A Good Investment
By Steven Buckley

Earlier this year, a mid-sized pest management firm on the East Coast was considering a candidate for a new technician position. They believed they had found their man: He interviewed well, had considerable experience and his references checked out. The last step was a background check. It came up clean, and the candidate accepted the job offer.

Just one month later, the firm had to terminate the technician’s employment after he was found to be responsible for serious damage to a customer’s home — and possibly for theft of personal belongings from the customer’s home. The customer sued the firm for these alleged losses.

What went wrong? The background check conducted by the firm was limited to just the one county where the man said he lived. A more extensive background check would have found he lived in other counties, where he had been arrested for vandalism and robbery.

This is just one example we have found where pest management professionals (PMPs) have lost time, money and had significant insurance claims all because of hiring and/or training practices that fell short.

When it comes to background checks, make sure you do extensive checks that go beyond just the applicant’s current area of residence. Hire a competent company to do the background check, and make sure it includes checking employment references, educational references, character references, and criminal and civil liability, as well as bankruptcy. If you need help finding a firm to conduct the background check, your state’s pest management association can usually help.

The ability to pass a drug screening and a good driving record are also important considerations when considering applications from potential candidates. I recommend going even further, with random drug tests and training for your staff in defensive driving skills.

If you’re considering defensive driving training, don’t be deterred because of the time and expense of driving classes. There are Web-based traffic safety management programs for individuals and fleets that help reduce moving violations, traffic collisions, injuries and liability exposure. Not only do many of these programs offer free pilot programs, but you can calculate your return on investment.

More and more, PMPs also recognize the need for technicians to have good communications skills. Employment references can tell you a lot about a candidate’s skills, but consider providing training in communications and customer relations skills.

Of course, make sure your technicians have all the required certifications and training in the use of pesticides and pest management procedures.

Many of the claims that we see involve human error and questionable decision-making. And let’s face it, when workers are injured or terminated because of poor performance or mistakes, it has a direct impact on your bottom line. It costs you money to train and hire new people, or to pay overtime to cover the lost hours.

Hiring new employees is an investment, and if you do a good job hiring and then training them, you can reduce turnover, save money and prevent accidents, all of which will cut down on claims from customers.

Steven Buckley is president of Brownyard Claims Management, a loss-prevention and full-service claims subsidiary of Brownyard Group (www.brownyard.com), a leading provider of insurance programs for the professional pest management industry.

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Four Things to Remember When It's Time to Renew Your Insurance
By John Culotta

In the February issue, I wrote about the impact that the “soft” insurance market was having on insurance for pest management professionals (PMPs), and the risks of choosing lower cost insurance coverage that could leave you exposed.

You may remember that I explained that the insurance industry moves in cycles between “hard markets” and “soft markets.” A soft market means that there is increased capacity — more people writing various types of insurance coverage — and, as a result, insurance rates drop. Some of the increased capacity is caused by insurance carriers entering into new types of coverages, even if they lack both the experience to meet the insurance needs of that business sector and the patience to stay with that industry when the market “hardens” (prices go up and coverage becomes harder to find).

At that time, I warned you against insurance companies offering you off-the-shelf policies with very attractive low premiums and, in many instances, inadequate coverage for the specialized needs of pest management firms. Such coverage puts you at risk of not being adequately covered when it’s time to file a claim. If you can’t cover your losses, your business may never recover.

Today, the market continues to soften ever further, with prices continuing to drop and more and more carriers willing to write coverage for PMPs. Given this insurance environment, it’s important to take a look again at your insurance policy and understand what exactly is covered:

1. Consider the limits. Simply put, for each coverage in your policy, you have a specific dollar limit, which is the maximum amount that the policy will pay at the time of a loss. These limits can be confusing, especially when you see an “occurrence” limit on the declaration page of the policy. This occurrence limit does not mean you are covered for that amount for a specific coverage. For example, while your policy may show an occurrence limit of $1 million, your wood-destroying organism (WDO) or insect (WDI) inspection coverage may carry a “sub limit” much lower than the policy occurrence limit. That’s why it’s important to understand what your limit is for each coverage in your policy.

2. Know the difference between exemplary and punitive damages. Exemplary damages are fines imposed on you by the state for a negligent act, while punitive damages are additional fines designed to punish you for your actions. Together, these damages can result in very large amounts awarded by the courts — and can be greater than the alleged bodily injury or property damage claim itself. That’s why it’s important to check with your state (or have your agent check) to see whether these types of claims can be brought against you, and make sure your policy has adequate coverage to protect you.

3. Understand your endorsements. These are provisions added to insurance policies to modify their coverage. For example, some pest management policies rely only on the Pesticide Herbicide Endorsement to provide pollution coverage at the jobsite. However, you may have spills or leaks at your business office, as well as in your truck or other vehicle that go beyond the coverage of your endorsement. You need to make sure that all of your potential pollution claims can be covered. This means you should have pollution coverage not only for pollution incidents at a customer’s job site, but also for spills at your location — as well as leaks and spills from chemicals on your vehicles.

4. Know the difference between an “admitted” insurance carrier and a “non-admitted” carrier. These are the companies that ultimately are writing your policy. Admitted carriers are specifically licensed to write certain coverages in your state, while non-admitted (referred to as surplus lines) carriers are not licensed. While surplus lines carriers are able to write many coverages in many states, ask your insurance agent whether the insurance carrier is admitted in your state and whether your state requires them to be admitted. Many PMPs have contracts with clients that require insurance by a licensed and admitted company, so by securing coverage with a surplus lines carrier, they are in violation of — and risk losing — their contract. And in the event of policy disputes or bankruptcies, the insured will have no recourse other than the state insolvency fund.

John Culotta is account manager of the Pest Control Program at The Brownyard Group (www.brownyard.com), a leading provider of insurance programs for the professional pest management industry.

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Protect Yourself with Proper Documentation
By Steve Buckley

In real estate, you often hear that it's all about "location, location, location." For pest management professionals (PMPs) who want to protect themselves from claims brought by customers, it's all about "documentation, documentation, documentation." In other words, the better your recordkeeping, the better your defense if a customer files a claim.

Among the most common claims against PMPs is hidden termite damage that customers believe should have been found during an earlier inspection. For example, new homeowners may do renovations six months to a year after purchasing their home, and find damage they believe should have been identified during the home inspection. Two additional common claims involve pest treatments/applications that failed to prevent infestation, and exposure to chemicals that customers say made them ill or have the potential to make them ill.

In each of these cases, being meticulous about your paperwork and following all regulations can help protect you. Here are five ways that you can better document your work and protect yourself if claims are brought against you and your firm:

1. Make sure that all contracts and inspection reports are signed and initialed. This simple step is imperative because one missing signature or initial can be used to show that customers did not approve work to be done, did not agree with an inspection report or did not know what chemicals were being used. So check — and doublecheck — that all signatures and initials are in place.

2. When you do an inspection, record every defect in the house or building, no matter how small. If termites are later found behind a wall where you have noted possible damage, a simple notation in an inspection report may protect you.

3. Use only licensed technicians and make sure you have it documented. No matter how professional and skilled technicians are, if they are unlicensed, their work can be called into question. And if a claim is brought against you, that can make the difference in whether you win or lose.

4. Have all your treatment applications comply with the requirements on product labels, and provide all chemical information to customers. Many states require that property owners know what is being used on their property, so make sure your applicators have labels and that you give product data sheets to customers. It shows exactly what you are using and how it can be used. In this case, more information is better.

5. Thoroughly clean all equipment so when you use new chemicals, your equipment does not have any traces of previously used chemicals. This is an important precaution because if a claim is brought against you related to chemical exposure, testing of the premises will be done. If there is even a slight trace of an old chemical, it will be difficult for you to prove that you did not use it. For example, if you are treating a home interior and an outdoor pesticide is found in the house, it could be determined that you are in violation of federal or state law.

Taking a few extra minutes to follow these five simple guidelines can be the difference between winning or losing a defense against a customer's unsubstantiated claim. Remember, it's all about "documentation, documentation, documentation."

Steve Buckley is president of Brownyard Claims Management, a loss-prevention and full-service claims subsidiary of Brownyard Group. The Brownyard Group (www.brownyard.com) is a leading provider of insurance programs for the professional pest management industry.

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Four Things to Remember When It's Time to Renew Your Insurance
By John Culotta

A "soft" market is when pricing is lower because of increased capacity. Today's soft insurance market is great news for many pest management professionals (PMPs): Rates have steadied or declined, and there are more options available. These lower rates may be a golden opportunity to strengthen your insurance coverage. What follows are four considerations before you renew your policies:

1. Don't forget to ask whether your insurance company is "admitted" in your state. Check your state's requirements before accepting coverage from a non-admitted (surplus lines) carrier, because you may be in violation of the state insurance law. Many PMPs have contracts with clients that require insurance by a licensed and admitted company, so by securing coverage with a surplus lines carrier, they are in violation of — and risk losing — their contract. And in the event of policy disputes or bankruptcies, the insured will have no recourse to the state insolvency fund.

2. Make sure you are covered with proper limits for both real estate and annual contract inspections. Both should be taken very seriously when considering your insurance program. Many insurance carriers offer this important coverage at very low "sub-limits" — as low as $50,000 or $100,000. But that's not adequate. Your policy may show an Occurrence Limit of $1 million on the declaration page; this does not mean your inspection coverage is being provided at the same limit.

3. Maintain adequate pollution coverage. Don't rely only on the Pesticide/Herbicide Endorsement to provide pollution coverage at the jobsite. You need to be covered for spills or leaks at your business office, as well as in your truck or other vehicle.

4. Protect yourself from legal action. Courts in certain states take the opportunity to impose a "fine" and make an example of pest management firms for their negligent acts (exemplary damages). In addition, where permissible by state, punitive damages are almost always now claimed in lawsuits. Both of these types of damages can result in huge amounts awarded by the courts — and often are even greater than the alleged bodily injury or property damage claim itself. Always be sure to check with your state to see whether these types of claims can be brought against you. If so, check your policy to make sure you have the coverage you need.

So when it's time to renew, don't just look for the cheapest insurance. Make sure your insurance agent is working with an established Pest Control Insurance Program, with admitted carriers who are experienced and committed to the industry, and with policies that contain the broad coverage and limits you need.

John Culotta is account manager of the Pest Control Program at The Brownyard Group (www.brownyard.com), a leading provider of insurance programs for the professional pest management industry.

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