Calgary's snow-removal contractors face skyrocketing insurance rates

When Joe Berry received his insurance renewal for his Calgary snow-removal company, Yardworx, he was hit by a quote 425 per cent higher than what he was paying two years ago.

Instead of paying $8,000 for liability insurance each year, he's now being asked to pay $42,000.

He isn't the only one. Of Yardworx's subcontractor pool of 60, Berry says each one has shared stories of insurance price hikes — and some can't get insurance at all.

"Some of the guys that are potentially new to the business, their quotes are $20,000 a year," said Berry. "Or they've had insurance with the company for the last 10 years but when they go to renew this year, the answer is, 'No, we don't do snow anymore.'"

Another contractor, with Norse Landscapes, saw his premium go from $17,000 to $65,000. It wasn't until he shopped around that he was able to lock in his premium, with a different company, at $38,000 — still double the original cost.

Snow-removal contractors and companies in Calgary are facing substantial insurance increases for similar or less coverage, putting some contractors out of business. But some established contractors say the increases can be beneficial for the overly competitive industry.

James Szojka, owner and president of Yard Dawgs Lawn Care, says his insurance rates were stable for six years. But now he's paying three times the cost for 60 per cent less coverage.

He says his primary focus is residential lawn care, but like many other landscaping companies, they also do commercial snow removal in the winter to keep year-round staff busy.

"Do you keep doing snow? Do you increase prices to your customers or do you just eat the additional cost and find ways in your company to lower expenses in other places, or just take a hit on the profit?"

These are questions companies now have to ask themselves, says Szojka.

The contractors CBC Calgary spoke to say consumers might find these higher insurance premiums reflected in fees charged by contractors, and some contractors may now decline work at high-risk slip-and-fall sites.

Increased insurance rates, reduced competition

Chad Blumes, owner of Rebel Outdoor, has seen how competitive the industry has become since he started the job in 2003.

"There's a lot of these guys that aren't actually set up as professional contractors, that are a guy with a truck and a shovel," said Blumes. His deductible for liability claims went from $1,000 to $10,000 earlier this month.

While he emphasizes he doesn't want to see anybody going out of business because they can't afford insurance, he says these increases can be an advantage for more established companies that can afford the high rates because it reduces the competition in the industry.

Rebel Outdoor has lost long-time customers to contractors who underbid, he says, despite providing consistent work and ensuring there is low slip-and-fall risk on his clients' properties.

"If the customer doesn't understand what they're paying for, they don't understand why your rate is substantially higher than somebody else's rate," said Blumes.

Szojka says this is common in the industry, and clients need to be careful who they're hiring in case they get sued for a fall on their property and their contractor isn't properly insured.

"It's really trading the short-term benefit for long-term sacrifice. And it can get very scary, very fast," said Szojka.

Ultimately, Blumes says Calgarians will come out of this with a pool of more professional contractors to work with.

High claims contributing to premium pressure

Aaron Sutherland, vice-president of the Insurance Bureau of Canada's Pacific region, says various industries across the country are experiencing substantial increases in liability insurance.

He says it's happening because of more frequent and more costly liability claims across the country — a 108 per cent increase between 2013 and 2020.

Those claims are now being reflected in insurance prices.

"When those do come forward and ultimately go to court, the awards and the payouts for some of those are increasing — in some cases quite dramatically," said Sutherland.

With snow removal in particular, Sutherland says they're seeing a trend where liability for injuries from slips and falls are being transferred to snow-removal contractors.

Previously, that injury would have been covered by the property owners — the client who hired the contractors to clear the snow.

"If someone slips and falls after you've removed the snow, that's on you, so to speak. Now that snow-removal contractor, their insurance policy has to pick that up."

Additionally, Sutherland says Alberta leads the country in the number of slips and falls.

Liability insurance claims in Alberta totalled $608 million in 2019, followed by $537 million in 2018 and $337 million in 2017.

All contractors CBC Calgary spoke to say many of their clients are now requiring $5-million liability compared with the usual $2-million liability, contributing to the premium pressure. 

"That likely is to account for the fact that when someone sues because they got hurt during a slip and fall, the amount they're being awarded is much higher than previously, and therefore you need more insurance to cover those high amounts," said Sutherland.

Sutherland says the Insurance Bureau of Canada recommends that provincial governments consider legislative reforms, leading to more proportionate awards in court and a more reasonable time frame to make claims.

Berry agrees, and says he would like to see Alberta follow in Ontario's footsteps by limiting the time frame to file an insurance claim after injury from two years to 60 days.

The City of Calgary said in a statement it has not yet been affected by snow-removal insurance premium increases, and it continues to work with contractors to clear Calgary's roads and sidewalks.