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Good Contracts Save Time and Money

by Kenneth F. Cerullo, Esq., The Commercial Agency

All business owners seem to be busy these days – often working more and getting paid less! One way to work smart is to leverage the power of proper contracts with your customers and subcontractors as part of your business operations. Many contractors hesitate to invest the time and money necessary to develop and implement good contracts. However, a well prepared contract with the help of an attorney knowledgeable in construction issues will help you comply with applicable laws, and often limit your liability in the event of a claim or disagreement. By investing some time and the minimal expense of an attorney review, the average contractor can create standard contracts to use with both owners and subcontractors – and save time and money in the long run!

Proper contracts with owners serve to minimize the chance of violations by the contractor of laws such as the New Jersey Home Improvement Practices Act (which includes landscape services) or the New Jersey Consumer Fraud Act. Such violations can be costly with severe penalties (allowing disgruntled homeowners to seek triple the amount of losses caused by a home improvement contractor). There have been cases in which a contractor has been owed large sums of money from a homeowner, only to owe the homeowner at the end of the day as a result of not having a contract that is compliant with the law. Additionally, good contracts will delineate and limit your scope of work; and in turn, limit your liability to the work actually performed in the case of a loss. Many times contractors are sued for work they did not even perform! Lastly, insurance does not cover breach of contract. A well prepared contract reduces the chance of misunderstandings between you and your customers.

On the other hand, proper contracts with your subcontractors will permit you to transfer risk and liability to subcontractors performing work on your behalf. A good subcontract with a subcontractor should include proper insurance requirements (including a written requirement that the subcontractor add your company as additional insured) and a hold harmless/indemnity provision requiring the subcontractor hold you harmless or indemnify you for claims and losses arising out of the subcontractor’s work. It’s only fair! After all, why should you be responsible for problems arising out of the work of your subcontractors (e.g., landscape lighting, irrigation, tree work, etc.)? In the case of a loss, a good subcontract will provide a good defense to the attorney representing your interests. With a good defense, your attorney will be able to eliminate, or at least limit, your liability (resulting in less legal expenses and claims paid out). Less liability results in a better insurance claims record (loss runs) and lower insurance premiums. Lastly, you get the added benefit of limiting your time with lawyers!

In conclusion, good contracts with customers and subcontractors allow you to work smarter by spending your time doing what you do best – developing new business opportunities, estimating jobs, designing interesting projects, etc. – instead of meeting with lawyers and attending depositions!

Kenneth F. Cerullo, Esq. is the President of the The Commercial Agency, Inc. – Contractor’s Insurance & Bonding Specialists. Ken is a graduate of Bucknell University with a degree in Civil Engineering. Ken later received his Juris Doctor degree from Rutgers Law School, and practiced Construction and Surety Law with a large New Jersey law firm. Ken can be reached by e-mail at or by phone at (201) 391-1324.

The author is not providing any legal advice or any professional insurance advice to a particular insured or in connection with any particular claims scenario. The author disclaims any and all liability in connection with any party’s reliance on the content of this article. Insureds are advised to consult with their own professionals as to their own insurance coverage.

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New Year, New Initiatives

by Ken Cerullo, Esq., The Commercial Agency

It’s the beginning of a New Year and many people make resolutions! New Year’s resolutions are many times to lose weight and go to the gym more often, but here are two more worthwhile resolutions: 1) Take a new, “fresh” look at your insurance program and make sure it takes into account any recent changes to your business operations; and 2) Write, Email or Call your State legislator to support a legislative effort that will help your industry and business.

Insurance Review
Many times contractors put their insurance programs on “auto drive” and fail to take a “fresh look” at their policies. Even if your New Year’s resolution were to examine your insurance costs (a good idea), reviewing the actually policy coverages is of the utmost importance to make sure you have coverage when it is needed. While you may invite an agent in to give you a quote, too often unsophisticated agents just ask for “dec sheets” and provide an “apples to apples” quote based on the same incorrect information that you may currently have on your policies. You need to have the correct named insureds, coverages, limits, equipment, etc. You pay a great deal of money towards insurance – you should make sure you and your agent take the time to make sure information is correct and target the coverages you actually need in the most cost effective way. After all, it does not cost anymore to do it right and that is why you are paying your agent a commission!

It’s advantageous to have annual meetings with your insurance agent so the agent can prod you along and force you to think about the insurance aspects of any changes you may make to your business operations. You are thinking about other things – payroll, hiring, new jobs, customer issues, etc. You are not always thinking about insurance. That’s why you have an agent. Maybe you changed the address of your office? Maybe you now store your materials somewhere else? Or park your vehicles and equipment elsewhere? Maybe you bought a new snow plow at a cost of $3,000 to $4,000? Maybe your business is now renting from you individually and you only have your company name on the policy? These are all little things with big consequences.

By way of example, let’s say that you bought a new snow plow for the upcoming season, you need to discuss with your agent how to best cover your new business investment. That particular piece of equipment should probably be scheduled on your policy as opposed to being covered by the miscellaneous tool floater you may or may not have on your policy. Those miscellaneous tool floater policies many times have a limit of $1,000 to $2,500 for any particular piece of equipment in which case you would be underinsured (especially if you bought 3 new plows and they all got stolen).

A Call to Action! Please contact your State Legislator in Support of the Snow Plow and Deicing Liability Limitations Bill!

Great News to start a New Year!. On January 23, the ASCA’s model legislation – Snow Plow and Deicing Liability Limitations Bill (New Jersey Senate Bill 181) was passed by the NJ Senate with special thanks to Senator Christopher “Kip” Bateman, our NJ Senators, Kevin Gilbride (the Executive Director of the ASCA), and Tom Castronovo.

However, passing the NJ Senate is ONLY one step in the legislative (law making) process. In order to become law, the bill still needs to be voted on and passed by the General Assembly before it even reaches the Governor for signature.

If this bill eventually became law, hold harmless agreements and indemnification clauses in which property owners pass on their liability to you will no longer be enforceable. This will hopefully result in reduced insurance premiums for snow plowing operations and provide an incentive for property owners to take appropriate actions to reduce their liability (and maybe even more work for you).

Accordingly, we need every NJLCA member to spread the word, and at the VERY LEAST contact your Assemblyperson to support this bill.

I WILL MAKE IT EASY FOR YOU. Please contact me directly at and provide me your home town. I will email you back with the name of your assemblyperson and number to call.

The information set forth in this article is general in nature and no legal advice is being given. Insureds are recommended to speak with their own insurance agent and attorney to discuss their own particular risk exposures and needs.

Kenneth F. Cerullo, Esq. is the President and an Owner of The Commercial Agency, Inc. in Park Ridge, NJ along with his brother Steve. He is also a Co-Founder of the New Jersey Agents Alliance (NJAA) – a limited group of select agents spread throughout the State of NJ with over $175 Million is premium volume. Ken currently serves as the Legislative Chairperson for the NJLCA and can be reached by email at or (201) 391-1324. You can also visit the Agency websites at or

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Employment Related Lawsuits Don’t Discriminate

by Kenneth Cerullo, Esq.

Did you realize that employment related lawsuits comprise a very large portion of the court dockets in Bergen and Passaic Counties?

With that information in mind, is your company covered if someone you interviewed alleges he did not get hired due to his race or ethnic background? How about if a female office assistant sues you alleging you created a hostile work environment by failing to reprimand your star salesman for “hitting on” her and joking about her physical attributes? Or how about that employee you terminated because he filed a workers’ compensation claim or the other employee you fired on the spot for stealing. Yes, he stole from you and you get sued! Believe it or not – this happens!! And you don’t want to find out after the lawsuit is filed that you are without coverage!

Even innocent and unintentional conduct that on its face appears to be consensual can turn into a serious claim. During this summer’s politically charged environment, we can all envision a foreman joking around with workers of Mexican descent that Trump is going to “build a wall” to keep them out. Business owners should be wary of such conduct – and take the risk seriously!

The name of the insurance policy providing such coverage is referred to in the insurance industry as Employment Practices Liability Insurance (EPLI). Employment practices coverage is usually excluded from your general liability policy

Whether you are hiring, firing or just managing your employees on a day to day basis, you have a risk of a claim that could put you out of business. Besides the more common types of claims under EPLI policies including wrongful termination, discrimination or sexual harassment, many policies cover claims arising out of other inappropriate workplace conduct including (but not limited to) defamation, invasion of privacy, failure to promote, deprivation of career opportunity, and negligent evaluation. Third-party employment practice coverage is also available to cover liability claims by non-employees such as customers and vendors.

Many owners are surprised to find out that the claim can still cost hundreds of thousands of dollars even if they have no fault and are ultimately found not liable. Why? Because the attorney fees can be very costly to defend such a lawsuit. Such litigation includes a great deal of discovery to unravel the merits of the claim. It’s classic he said, she said!

What makes the claims more costly is that companies rarely do what is necessary to limit and help protect themselves from such claims. Some of the risk management techniques available to businesses include employee handbooks with policies and procedures reviewed by your attorney, along with training of supervisors and employees regarding impermissible conduct (including but not limited to discrimination and sexual harassment) and ways for potential victims to make a complaint should the need arise.

The premium charged for EPLI coverage depends a several factors including the type of business being insured, the number of employees, prior lawsuits or claims, percentage of employee turnover, and whether the insured has implemented established rules and practices as discussed above.

EPLI can be provided as a separate policy or sometimes by endorsement to the general liability policy. EPLI is usually written on a claims-made basis, meaning the incident resulting in a claim must occur during the coverage period (so an employer may be exposed if coverage is dropped and a claim comes in months or years after the alleged incident).

Many companies writing EPLI coverage will offer a support helpline, standard policies, forms and checklists for your assistance. It makes sense because it is in their interest to help reduce the risk of a claim!

I have seen numerous employment related claims and the business owner always regrets not getting the coverage. But even if you do not obtain the coverage, you should have that conversation with your insurance agent and know your risks!

Kenneth F. Cerullo, Esq. is the President and an Owner of The Commercial Agency, Inc. in Park Ridge, NJ along with his brother Steve. He is also a Co-Founder of the New Jersey Agents Alliance (NJAA) – a limited group of select agents spread throughout the State of NJ with over $175 Million is premium volume. Ken currently serves as the Legislative Chairperson for the NJLCA and can be reached by email at or (201) 391-1324. You can also visit the Agency websites at or

The information set forth in this article is general in nature and no legal advice is being given. Insureds are recommended to speak with their own insurance agent and attorney to discuss their own particular risk exposures and needs.

Courtesy of Executive Perils 2011 Study of EPLI cases.

Weather Works

Fall and Winter 2016 Outlook

FALL: The fall season comes in connected to the tropics for a very wet month at times, for October standards. We may even see a tropical system up the coast. La Nina starts to peak in November and December and that will shut off the tropical moisture as we head into winter. November is right on track with temperatures and rainfall, but we’ll drop to a colder trend toward Thanksgiving with a major influence of La Nina by the start of December. Be on guard for an early season light snow right after Thanksgiving or the first few days of December.

LA NINA IS HERE: All signs point to a weak La Nina this winter. That’s good news if you charge by the inch and also by season. Why would this benefit you? We see an average snowfall this winter to about 10% above average, so if you charge by the inch and by the treatment you’ll see a decent winter with plenty of chances to use that leftover salt from last winter. The seasonal accounts will average about 5% to 10% extra of what you bid, due to a few extra treatments and inches of snow, but you won’t be overworking all that much vs. an average winter.

WINTER: Unlike last winter, El Nino is gone and so is the chance of a mild start. We see early season snow in late November or early December and it will stay colder than normal all winter. The snowiest month will be January with two nor’easters of 4”+ this winter. This is based on the 17 La Nina winters in NJ the past 66 years. Overall, the state will see 0% to 10% above average snowfall with 15% to 20% above average along the entire Jersey shore. Expect many smaller snow systems this winter, with a low risk of an ice storm.

Rob Guarino is President of The Weather Pros, a weather consulting firm, and 3 other weather related websites. He was chief Meteorologist at Fox in Philadelphia for over 10 years serving NJ and PA. He has won 12 regional and national awards for accuracy and forecasting and is a member of the NJLCA.

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Your Homeowner’s Insurance Matters Too

by Kenneth Cerullo, Esq.

Although I personally spend most of my time handling the insurance needs of businesses including landscape contractors, I often get questions about personal lines (automobile and homeowner) matters. Accordingly, I would like to take a little time to discuss a few topics – cost saving techniques and coverage issues – that may be of interest to the average person shopping for homeowners insurance.

As a result of our still sluggish economy, there is an increasing number of homeowners that have no other option but to reevaluate all their significant expenses including insurance premiums. Simply put, most homeowners not unlike a business, need to find the best value for their money – the coverage required at the best price possible (our agency recently expanded our personal lines department to satisfy this demand).

In terms of cost savings techniques, the first and most important thing any person looking for auto and homeowners insurance should know is that your insurance credit score is a big determinant in the insurance premium paid. Starting in the mid-1990s, insurance and independent organizations found a strong correlation between a person’s credit history and the likelihood of that person filing a claim. Accordingly, this practice is now widespread with most major insurers using the practice to underwrite and price policies. And whether you agree with it or not, you should get used to the practice, because it is legal in most states, including New Jersey (with certain consumer protections). It therefore goes without saying that it is important to pay attention to your credit score, try to correct any inaccuracies, and make sure the insurance company is running the credit report intermittently to make sure you are not paying an increased premium while your credit report has significantly improved. I recently helped an insured with another agent save over 50% in their annual insurance premium by instructing the insurance company to run a new insurance credit score! Unbelievable!

What if a husband and wife have different credit scores? Although the various insurers may handle it differently, it appears that many companies usually use the score of the person applying for the policy (so the spouse with the better credit history should apply for the coverage). Moreover, at least one company representative has told me that the insurance credit score is usually best when a homeowner is purchasing a house (which makes sense because the homeowner is generally doing everything possible to improve his or her credit and to rectify any inaccuracies or mistakes in credit history). Lastly, homeowners should not be concerned about a negative impact of these insurance credit score inquiries while getting insurance proposals/quotes. According to the NJ Department of Insurance and Banking, such inquiries are reflected on the credit report, but are not used in developing an insurance score. And one of the top 3 credit reporting companies also advises that insurance inquiries do not affect credit scores because insurance inquiries are recorded only for your personal record and are not released to lenders and used in credit score calculations.

Shifting now to coverage, homeowners often overlook one of the principal reasons one buys a homeowners policy

– liability coverage! In fact, many renters feel that they do not need insurance because they simply don’t care about losing their personal possessions and furnishings. When I was a young professional renting an apartment near my office, I didn’t care about my IKEA sofa, TV, or stereo either. But I certainly did care about playing in a golf outing and hitting someone unconscious with a stray shot (slice) off the tee. And to those homeowners with a swimming pool and children inviting friends over for a pool party, I would definitely be concerned. In fact, I would put a call into my insurance agent for a personal umbrella policy before the trip to the grocery store for ice cream and cake. A personal umbrella policy provides higher limits over and above your homeowners and automobile liability limits (talk about a great value).

Another issue homeowners often ask is whether they should put in (submit) a claim. Some may say “that’s why I have insurance… to pay claims when I have a loss.” It may seem unfair, especially if you have paid your premium religiously over the years without a claim, but it is generally not a good idea to submit small claims. And if you put in a few claims in a short period of time, it probably will not be seen favorably by the insurance company and may result in increased premiums or policy cancellation. One should generally use their insurance for large property claims, and you should always submit a liability claim not to jeopardize coverage (an insured is obligated to report claims promptly). A homeowner should call his or her insurance agent to ask the premium saved at higher deductibles. It may or may not make sense to increase your deductible.

With regard to coverage, it also pays to thoroughly review all optional coverage with your agent. Coverage for water backup from sump pump failure is such a coverage and may prevent you from being left on your own for a large uninsured water damage claim. This coverage is not to be confused with flood coverage. If you have a risk of flood or water damage from surface water entering your house, I highly recommend flood coverage. Like other policies, flood insurance has many conditions, limitations and exclusions so it is important that you understand the coverage provided so that you can take precautions to prevent uninsured losses.

Another thing homeowners often fail to do is advise their agent when they do a home addition or renovation. It is wise to increase the limit on the policy before the renovation to account for the finished home value. You don’t want an uninsured loss!

The information set forth in this article is general in nature and insured homeowners are recommended to speak with their own insurance agent to discuss their own particular needs.

Kenneth F. Cerullo, Esq. is the President and an Owner of The Commercial Agency, Inc. in Park Ridge, NJ along with his brother Steve. He is also a Co-Founder of the New Jersey Agents Alliance (NJAA) – a limited group of select agents spread throughout the State of NJ with over $175 Million is premium volume. Ken currently serves as the Legislative Chairperson for the NJLCA and can be reached by email at or (201) 391-1324. You can also visit the Agency websites at or

“In terms of cost savings techniques… you credit score is a big determinant in the insurance premium paid.”

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Legislative Wing

This year the NJLCA, in partnership with other interested associations, made great progress in moving favorable legislation forward!

On the state level, we were lucky to have Senator “Kip” Bateman in our corner. He recently introduced The Snow Removal Liability Limitation Act (S.3121). The law, if enacted, would basically nullify hold harmless provisions in snow removal contracts. It is hoped that such legislation will reduce snow plow insurance premiums over time by not permitting property owners to unreasonably shift all liability to the snow plow contractor. I personally think tort reform would be the best solution to this problem, but that does not appear likely in NJ. Accordingly, we are looking for support of this legislation because it is expected to provide some relief and “move the ball forward”.

On the federal level, the Lawsuit Abuse Reduction Act (HR758) passed the U.S. House of Representatives by a vote of 241-185. The bill now moves onto the Senate. This bill would change Rule 11 of the Federal Rules of Civil Procedure (FRCP) and make it mandatory for federal judges to impose sanctions on plaintiffs and plaintiff ’s attorneys who file frivolous lawsuits. It is hoped that a change to the FRCP will result in the states adopting the same changes soon thereafter which is often the case.

Also on the federal level, President Obama recently signed into law an omnibus spending bill for 2016 that includes several beneficial H-2B provisions that will exempt H-2B returning workers from the 66,000 annual cap; allow the use of private wage surveys; clearly define “seasonal” as ten months; and more. Lawmakers who fought and voted for these changes should be applauded because they faced a great deal of criticism from anti-immigration and labor groups.

It is very important to understand that bills do not magically become laws. Although many of us travelled to Trenton, NJ and Washington, DC, our work has only begun and we really need your help and that of others to make things happen. Please contact me to help strategize how you can help our efforts through sending letters, making announcements, and otherwise spreading the word! Thanks to everyone who has helped in these efforts including Jody, Gail, and Maria. Special thanks to the Accredited Snow Contractors Association (ASCA) and Kevin Gilbride for all its efforts and for proposing the model legislation set forth above.

Kenneth F. Cerullo, Esq. is the President and an Owner of The Commercial Agency, Inc. in Park Ridge, NJ along with his brother Steve. He is also a Co-Founder of the New Jersey Agents Alliance (NJAA). Ken currently serves as the Legislative Chairperson for the NJLCA and can be reached by email at or (201) 391-1324.

President’s Message Continued ment, clean and paint the interiors of your enclosed lawn maintenance trailers, and wax and detail your hard-working trucks. Make sure you do an inventory and assess all trailers and trucks to check whether all preventative maintenance and repairs have been completed, so when the spring weather hits you are ready for service. Take the opportunity to schedule training on new equipment and proper landscape practices. Schedule safety meetings to prepare your crews and always maintain safe work environments.

Cherry tree blossoming in Secaucus, NJ on December 30, 2015. Photo: Tom Canete

Lastly, there’s never a bad time to reach out to your customers! During the course of a busy season, either in Landscape or Snow, we don’t often have the opportunity to personally talk or write to our clients and let them know how much they matter. Follow up and make sure they are pleased with the services you have rendered and let them know about other services you may provide.


Tom Canete