Insurance has been a hot topic for landscape designers for as long as I can remember. Most of us got into this business, not because of our love for numbers or for our business acumen, but because we love design, plants or the outdoors. Insurance is a necessary evil and most of us are out of our element.
I'm really no different, except for the fact that my father spent his entire career in the insurance industry. Some of his clients were large corporations, many of them household names. But many were just like us, and he made sure I had plenty of coverage, so I learned a lot. Having said all that, I'm far from being an expert. Having a father in the insurance industry makes me no more of an insurance expert than being married to Peyton Manning makes his wife a football expert. Of course his dad has some chops.
There are a number of different types of insurance that landscape designers--particularly those who are self-employed--need to know about. I'll summarize them as I understand them one by one.
General Business Insurance
My insurance people refer to this as the “Commercial Package.” In it are basically three different coverages.
Commercial General Liability
As a broad generalization, this covers the following types of claims:
A visitor to your business is injured on your premises.
Property damage at the business location.
Advertising Injury
Commercial Property Coverage
This is the insurance package that covers your files, computers, software and information from theft, fire or other destruction. It is similar in concept to homeowner's insurance.
Commercial Auto
This does not replace a driver's automobile coverage. It is to cover liability for damage or injury caused by an employee driving his/her own, or a company vehicle while on company business.
Health Insurance
You know what this is. Don't expect any group discounts through national associations as it's a state by state thing.
Professional Liability
This is a big one for design professionals. You will have to decide for yourself whether you want to take the risks of going uninsured.
The idea is that Professional Liability covers errors and omissions in design. So if your design decisions cause someone harm, you can be held liable. If you maintain continuous coverage, for say, 10 years, then you are covered that far back. So if you have coverage, it's important to keep it intact.
How can it protect you?
In my experience, most risks in residential design come on the build side. That is, the contractor is responsible. Of course, that could be you too, but the insurance that covers the contracting is the policy that will cover the claim. Examples could be that water gets in the basement, or a retaining wall fails. But what if you specify a paving material that gets slippery when wet and someone falls? Is that a design issue or a contracting issue?
Most insurance people will recommend that designers carry professional liability insurance, especially if they have other, largely unsupervised designers who work for them. Design-only offices are good candidates too.
When you start investigating, you will find that professional liability insurance is expensive. It is. You may also find that there are companies that won't even consider covering you. I got turned down a number of years ago based solely on the fact that I had exactly one roof garden in the portfolio. Roof gardens were an automatic disqualification from this provider. That was frustrating, but the message was pretty clear about roof gardens: They generate insurance claims.
Worker's Compensation
Some states require that you carry it. Others don't. If an employee gets hurt on the job, worker's comp is what protects you. Rates are based on employees' job classification. Administrative workers have less risk of injury than a guy who climbs trees, so the rates are different. Generally, a multiplier is used in conjunction with payroll. In my case, the premiums were paid in advance, but always adjusted based on annual audit. I imagine that is pretty standard.
If you subcontract anything, make sure you require a certificate of insurance from each subcontractor and keep it in your file. If the auditor sees a subcontractor with no certificate on file, he can treat any payments to that sub as payroll. Think about that.
Umbrella Coverage
Umbrella coverage fills the gaps in your other policies. It also increases your limits. That is, if you have, say $1M in liability coverage on one of your policies, but you have a claim for $3M, an umbrella policy could take care of that. It's a good idea to consider one, but make sure you understand what it covers.
Insurance is most definitely a necessary evil. If you work for or own a big company where designers are on their own, a company could be at risk without even knowing it. But a sole practitioner working from home has a lot to lose too—like the home. Find yourself a capable insurance professional who is interested in your best interests, and not just a sales commission. Experience will help you figure out one from another. Figure out what your risks are and what costs are to cover them. Then make an informed decision.
Tim Thoelecke Jr., FAPLD is the founder of the American Academy of Landscape Design. The AALD is an advanced education curriculum aimed at improving landscape designers' understanding of the most sophisticated and often overlooked aspects of landscape design. Graduates possess the confidence and skill set that differentiates them from other designers and allows them to effectively communicate ideas based on sound design principles.