You’re Liable to Need It
An increasing number of commercial pool owners are requiring any service profession who offers pool maintenance to carry liability insurance. As the exclusive insurance provider for the Independent Pool & Spa Service Association since 1981, Ray Arouesty, J.D., senior vice president of Arrow Insurance Service (a division of HUB International Insurance Services, Inc. in West Lake Village, Calif.), is a leading expert on liability insurance provisions and needs for pool professionals. He says he believes the increased frequency of this requirement goes back to the risk managers and insurance companies for property management firms recognizing the risk involved with swimming pool maintenance.
“When you have issues like damage to the property or injuries, frequently there is a lawsuit filed,” Arouesty says. “The lawsuit is probably going to be filed first against the property owner and that goes to the insurance company that insures the property. They send it out to their attorneys, who review the lawsuit and then file what’s known as a cross-complaint to hold the culpable party responsible, which is typically the swimming pool service technician.”
If the service tech is uninsured or doesn’t have the funds to make good for the damage or injury claim, then the property owner will be held responsible. “That’s why they want evidence of insurance when they hire a swimming pool service technician,” Arouesty says. “Insurance is a key element in competency for doing a job.”
In addition to being an insurance broker for 40 years, Arouesty obtained a California pool repair contractor’s license in 1990 and has been an attorney for 25 years. He recognizes no standard insurance policy has the provisions that a service technician needs. “The closest thing to a standard policy for the swimming pool service industry is totally inadequate,” he says. “A standard policy has so many exclusions for the common claims that the service technician faces that it doesn’t give him a whole lot of coverage.”
Arouesty recommends evaluating risk when looking for a policy, examining what you do each day in your job. Among the areas where he’s seen a standard insurance policy fall short on are coverage for chemical damage, chemical exposure, mold damage caused by overfilling the pool — one of the most common errors Arouesty sees each year that results in a claim — repairs or remodeling. The definition of repairs or remodeling is often so vague that it’s difficult to determine what is and is not covered.
Forgoing liability insurance could lose you more than a potential client; Arouesty explains that a liability policy could also save you from bankruptcy. Insurance primarily provides two distinct coverages, he says: monetary damages and defense coverage. On most policies, he says, legal defense coverage is unlimited. “In many cases, we see the cost of the legal defense exceeding the amount of damage done,” he adds.
So, if there is a drowning and a lawsuit is filed that implicates the service tech, what does that mean if he doesn’t have insurance? “He’s going to have to pay for his own lawyer, and most technicians I know don’t have the financial wherewithal to even get a retainer of $25,000 for a defense lawyer,” Arouesty says. “So he’s looking at possible bankruptcy.”
Service technicians are around chemicals, expensive equipment, adding water to pools, doing repairs, remodeling, and driving a truck with a bunch of chemicals. They need liability insurance to protect themselves more than anyone else, Arouesty says, “and they must examine what they do on the job to make sure everything is covered. Any policy has to address those hazards that are very, very common in the industry.”
