Discover how inattention to proper clean-up could impact a business’ third-party liability.
Read a scenario in which “clean up or pay up” could potentially apply to a commercial business.
Whether you read it, hear it, or say it, there is definitely a common-sense ring to the phrase, “clean up or pay up.” It’s a first-party lesson many of us learned early on from our moms every time she ended a sentence with “not until you clean up your room.” Our moms were and are messaging obligation and responsibility. Today’s blog extends the message to include liability, specifically third-party liability for commercial businesses.
From the standpoint of third-party liability, there is potential for “clean up or pay up” to be very consequential for any size business. Consider a hypothetical commercial gutter installation company, Gutters123, which routinely replaces old gutter systems with new. Regardless of whether Gutters123 has its own crew of employees or hires a subcontractor, it is responsible for its workmanship. Gutters123 may also be held liable for injury resulting from work debris. What is a run-of-the-mill installation job for Gutters123 on Friday could turn into a nasty liability claim on Monday, solely due to careless clean-up.
The following scenario highlights a situation in which inattention to proper clean-up realistically could have resulted in a damaging third-party liability claim. Recently, I hired a company to replace the gutters on my home. Two days after the job was finished, I was watering plants outside and noticed several pieces of metal scrap and loose screws in the grass and flower beds. Immediately I thought of the days when my son and his friends were young and running outside all summer long in toeless, rubber-soled shoes. Had this been 15 years ago, any of these kids could have had a sharp metal scrap pierce his shoe and foot. What really shook me was the possibility that one of them might have sliced a finger or more off, if he had picked up a metal scrap. Raw cut metal edges are deceivingly sharp and pose a serious risk to an unwitting child. I found one metal scrap on an evergreen that could have fooled an adult, because it looked exactly like a strip of scrap paper that could have blown from someone’s garbage. It was white, slightly curled on one end, about 6” long, and 1/2” wide at its widest point. Given its size and visibility, I was stunned at the crew’s negligence in failing to clean up this particular scrap.
Negligence gives rise to legal liability, and commercial liability insurance is one form of protection for businesses. One important consideration insurance companies use to evaluate a commercial insurance account is its claims history for the last 3-5 years. Inattention to something as ordinary as cleaning up work debris could result in third-party liability. Had one or more kids been injured as described above, the gutter installation company would undoubtedly have been sued by one or more third parties for negligence. While commercial liability insurance would respond to the negligence claim(s), the claim(s) would go on the record of the gutter installation company. Depending on the severity of the injuries, which in the above scenario could have been serious and long-term, the insurance costs for the insured might increase significantly the following year or more. Some insurance companies might choose to non-renew. Similarly, a commercial insured may experience premium increases or a non-renewal for claims frequency, even if the losses are not substantial in dollars per claim.
Richey-Barrett Insurance is your Trusted Choice Independent Insurance Agent for commercial and business insurance. We do more than sell commercial insurance … we are available to discuss your insurance concerns and answer questions.