Editor's note: John Culotta is program manager, PCOpro, at Brownyard Group

Spring is finally upon us and that means the busy season for pest control operators (PCOs). As they begin treating homes and businesses, not only will they face termite swarms and other pests, but also the risk of customer claims that their treatment was either ineffective or it damaged persons or property.

The risks abound, whether they are chemicals used to treat termites or the now preferred heat treatments for bed bugs. The specialized heaters used for bed bug eradication not only damage personal belongings, but also have ignited fires when placed too close to flammable material. They even have activated sprinkler systems, causing water damage.

A PCO's commercial general liability (CGL) policy is key to protection in these cases, but many policies lack or have subpar versions of the most crucial policy endorsements, most notably pollution and care, custody and control. Plus, many excess liability and umbrella policies fail to provide the broad protection they promise.

Care, Custody and Control

While typical CGL policies cover damage to a customer's real and personal property, they usually do not cover damage if that property is in the PCO's “care, custody and control.” In fact, most policies specifically exclude this coverage, and without complete care, custody and control protection, a PCO's policy may be essentially worthless.

When adding this endorsement, it's important to remember that not all are created equal. Some may still leave PCOs at risk. Here are a few things to look for in this endorsement:

Coverage for “real” property, not just personal property. The bigger liability issue is the building, not personal items. For example, if a PCO is doing a spray treatment outside and it discolors the building's vinyl siding, it would not be covered without an endorsement that covers real property.
Coverage for work done by subcontractors hired by the PCO, such as fumigation companies. If a subcontractor tents a home and causes catastrophic damage, it may not be covered.
Coverage for damage caused during spot treatments. Some policies will exclude spot treatments, covering only treatment to the entire structure. But spot treatments are common and have the potential to cause significant damage if done improperly.

Pollution

Many PCOs rely only on a pesticide and herbicide endorsement in the event of a chemical spill or leak at the job site. This can be a big mistake. These endorsements are not enough and leave a PCO liable for some of the most damaging claims. Here are some coverage details to consider:

Make sure the pollution endorsement covers what are often the biggest costs when there is a spill: the environmental damage and clean up. Surprisingly, many policies do not.
Consider spills or leaks that occur at the PCO's office or facility. These are not covered by the job site pollution endorsement, but can be included by modifying the pollution exclusion.
Add a pollution auto transit endorsement. Most policies only cover spills in a vehicle if it is involved in a collision or overturn. But the auto transit pollution endorsement also covers leaks and spills when a vehicle is parked at a job site.

Excess Liability and Umbrella

It's no secret that PCOs should have an excess liability or umbrella policy to provide an additional layer of protection above their primary CGL policy. Unfortunately, many of these policies do not extend over all the coverages, including care, custody & control and pollution endorsements.

For example, if a chemical spill at a job site triggers a government-mandated clean up, the cost could easily surpass the policy's primary pollution limits and reach into the excess layer. The same would be true for a claim in a home, where treatment resulted in a fatal or serious poisoning. Such claims can easily exceed a typical $1 million primary limit.

Monetary Damage

Beyond these general liability issues, the emergence of bed bugs has led to an increase in customers seeking monetary damages to compensate them for loss of income and other expenses caused by a PCO's negligence. The hotel industry is a good example. If a PCO treats multiple hotel rooms infested with bed bugs and that treatment proves to be ineffective, the hotel must close the rooms for additional treatments. They can hold the PCO negligent and responsible for lost income and other expenses.

This could easily happen on a cruise ship, at a summer camp, in a movie theater or practically any other business that can potentially lose income. In fact, although bed bugs are the most common example of these types of claims, many kinds of infestation where treatment is not effective can also result in customers seeking monetary damages.

Unfortunately, policies that include this coverage are not widely available, so it's very important to confirm whether or not a PCO's current insurance policy would cover such a claim.

As an industry with unique risks, pest control requires very specialized coverage. You can help make sure costly claims don't bite your PCO customers' businesses by knowing where standard CGL forms fall short, how far excess liability and umbrella coverages need to reach and why clients should seek specific coverages.

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