Every year as the winter season approaches, many businesses start bracing themselves for the winter months and all of the worries associated with operating a business in a snow exposed area. As an insurance agent, many of their concerns may come up in discussions with you and it becomes your job to help them avoid disasters.
For many businesses, snow removal costs are a line item in their budget and usually are determined by a contract they may have with a snow plow contractor. Within that contract they likely have a ceiling on the number of storms or number of inches that the contractor will cover before they start charging additional costs. But what happens when a winter season like last year occurs? Many businesses blew through their budgets mid-season and have to pay out thousands more to have the snow removed which can have a significant, unexpected impact on their bottom line.
Cost Containment Insurance, also known as Snow Removal Insurance is a great way to keep your client’s minds at ease knowing that they won’t spend beyond a budgeted amount for snow removal costs. This seasonal coverage protects their budgeted expenses by paying an agreed upon amount per inch or per storm beyond a certain threshold. The policy can be customized to each client depending on how they would like it to be structured for timeframe, deductible days and amount to insure. Below is an example of how it might work for a business in Philadelphia:
- Policy Period: November 1st – April 30th
- Insuring Agreement: The policy will pay $1,000 for each whole inch that is recorded beyond the selected deductible
- Aggregate Sum Insured: $50,000 (50 inches excess the deductible)
- Premium: Varies based on the deductible option selected
On the flip side of this, we can also design policies for Snow Removal Contractors who expect to be paid $X amount for plowing costs in a season. If we were to have a winter where it didn’t snow very much, we can design a policy for these contractors to be paid out at the end of a season if a certain threshold of snow was not met.