Termite Liability Exposures
The insurance professional's perspective on termite damage claims
By ANDY McGINTY
My good friend Dr. Stuart Mitchell asked if I could provide some information about termite liability and exposures for the pest management professional (PMP) and their companies. This is a good subject to discuss at this time as we have seen an increase in termite damage claims surrounding treatments and inspections of customers’ homes. Here are two important tips for maximizing your termite services and limiting exposures.
When our office gets a claim, we perform loss control while determining causes that might be outside of the insured’s control. The first thing we ask for is documentation. I have written numerous articles and spoken at many conferences on this very subject. There is nothing greater, when handling a claim or lawsuit, than having a well-documented file from the insured that includes a current and strongly worded contract. If you are issuing termite contracts that are more than three or four years old, well, they are too old. Changes occur every year and you need to stay current.
Graphs that are no more than a poorly drawn box with a date written down do us no good in adjudicating a claim. We need a graph that is drawn professionally, one with measurements, type and amount of product used and where the product was used. Make sure you list every bit of previous evidence of termites—shelter tubes, damage and live wood-destroying insects (WDIs).
I am also a believer in listing “possible termite activity” on the graph. Some do not agree, but after handling a few thousand termite claims over the years, mentioning “possible termite activity” goes a long way in adjudicating a claim. We could write pages and pages just on contracts and graphs, but the essentials stay the same.
This issue might not be new for some of the larger companies, but often those companies with 10 employees or fewer need to step up their quality control if they want to avoid or limit their termite liability.
The single most important place for the pest professional to start on quality control to mitigate future claims or suits: Annual inspections. These should be conducted for all of your termite contracts. Bar none, the most common reason we have termite damage claims, outside of poor original treatments, is the lack of thorough annual inspections.
At first, just focus by doing follow-up inspections after the annual inspections are done by your technicians. Check the quality of the work performed. Was the annual inspection document completed correctly? Does this year’s annual inspection show any major change since last year’s inspection document? Was the graph updated?
There is nothing more aggravating to an insurer than looking at, say, five annual inspections where three mention previous damage and the other two don’t mention it at all. You think plaintiff attorneys don’t live for inconsistencies like that for their case? You bet they do. Get out there and check the work your employees are doing! There is so much more you can do with your quality control, but getting started is as simple as that.
This article just scratched the surface of what you can do on a day-to-day basis to protect your company. Please get with your loss control professional, insurance professional or others you might know in the industry to assist in limiting your termite liability exposures.
Andy McGinty is executive vice president and chief operating officer of LIPCA Insurance and can be reached at email@example.com.
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