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Do You Have Too Much Liability Coverage?

Originally published: 09.01.11 by Matthew Stangle

You can right-size your policy with a thorough review and focus on safety.

What happens in a client’s home doesn’t stay in that home. Whether it’s a good job or a debacle, that client will tell a friend, who tells an acquaintance, who tells another friend.  Certainly if it’s a good job, that word of mouth will bring you more business. If, on the other hand, there was an accident, damage, or injury at the home, the client’s friend won’t be the first to know – you will.  

It may be in a message from one of your residential customers: While installing an air conditioning unit, your employee dropped the unit down the stairs, damaging the stairs, denting the floor, and shattering the grandfather clock at the bottom of the stairs. “What are you going to do about it?” asks the disembodied voice on the answering machine.  

Or, it’s a Murphy’s Law situation where a heating unit you installed leaked and caused an explosion, damaging the home and causing the death of a pet. The homeowner now needs to move to a hotel, they’ve hired a lawyer, and they are claiming negligence on your part for not properly training your employees on safety.

Where do you turn? If your insurance policy has been reviewed carefully, and you have a safety plan in place, you can feel confident that you’re covered. You should know when to use your policy and when to pay out of pocket. A few thousand dollars to reimburse a homeowner for damaged flooring and furniture is a minor amount and shouldn’t have a huge financial impact for you. Insurance is for the large claims that can bankrupt your business.

To review your insurance policy, your agent should do a survey of your business’ needs, a thorough analysis of coverage, and have either good knowledge of your business or the willingness to quickly learn it.    

One of my clients, Rick Joy, of Joy Heating and Cooling in Maryland, told me, “We were paying for things we didn’t need and missing others. Reviewing policies and keeping in touch is not something every insurance agent does.”

An independent small businessman, Joy provides heating and air conditioning services throughout northern Maryland. He requires basic liability coverage, and he also can save money on his policy due to his safety background. He served as fire marshal for more than 20 years. Joy’s previous insurance company simply renewed his existing coverage every year, oblivious to the nuances of his business and his expertise that could save him money. We reviewed his policy and found places to save, yet made sure he had thorough liability coverage.

Review your general liability coverage carefully with your insurance agent. Ask questions. Understand your limits and coverage. Typically, general liability includes three areas: bodily injury and property damage, personal and advertising injury, and medical expenses.   

You can determine the amount of liability coverage you need by evaluating your potential risk, the state in which you operate (both its legal minimum and its history of awarding high damage amounts), and your personnel quality. If you have a $300,000 limit and the settlement claim is $500,000, you are responsible for the difference.  Consider a minimum limit of $1 million on your policy, then add an umbrella policy if you need to increase coverage limits. 

Next, implement a safety program. Not only will this increase awareness throughout your company, it also will afford you some insurance discounts and lessen your risks.   Ask your insurance agent for safety tips targeted to your business market. Or, if you have a safety background, make note of it to your agent, as Joy Heating and Cooling did. Distribute the tips to employees and technicians by posting them in high-traffic areas, including them with employees’ paychecks monthly, and e-mailing them as part of an internal staff newsletter. Create a safety committee made up of employees from each department to help you implement safety procedures. This participation gives your employees ownership in the program and fuels their desire to reduce accidents. Hold quarterly meetings of the safety committee.  

Then, communicate the committee’s policies to your entire staff through short, regular safety meetings — less than five minutes per week. Make the meetings mandatory and document attendees. These records will be pertinent if someone is trying to prove negligence on your part. You’ll be able to show that you educated your employees on safety issues.

Your clients expect your utmost care when you are working in their homes.  What happens there doesn’t stay there — word gets around. If you or your employees make a mistake, the client expects you to make it right. Be prepared and know your options.  Making it right is simply good business sense. Having the right liability insurance is, too.

Matthew Stangle is an insurance agent with WSMT Insurance, which was named 2011 Business of the Year by the town of Bel Air, MD. Matthew is a member of the Heating and Air Conditioning Contractors of Maryland (HACC) and writes the insurance for several HVACR companies. He also ran a $5 million service location with 42 employees prior to joining the insurance industry.

About Matthew Stangle

Matthew Stangle

Matthew is vice president, managing partner at InsuranceForce, based in Annapolis, MD. As the leader of the company's Risk Management Division, Stangle created the "Safety Saves" program for the HVAC market, and he has implemented other similar programs for clients in various industries. His work was recognized by the National Safety Council, and he was among 41 honorees selected from around the world to the 2014 Class of the NSC Rising Stars of Safety, presented by DuPont Sustainable Solutions. In addition, Stangle was named HACC Associate Member of the Year 2014 for his support of the HVAC industry. He is a member of the Board of Directors of HACC. For more information, visit

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Do You Have Too Much Liability Coverage?

Typically, general liability includes three areas: bodily injury and property damage, personal and advertising injury, and medical expenses. Determine the amount of liability coverage you need by evaluating your potential risk, the state in which you operate (both its legal minimum and its history of awarding high damage amounts), and your personnel quality.
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If your costs have increased, and you don’t raise your prices, then your profits will decline.