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Loss Lessons
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SERVICE CONTRACT
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PestSure Members,
In one PestSure general liability claim, a public building
had been serviced for 17 years under a general pest control
contract. Toward the end of that 17 year relationship, significant
termite damage was discovered estimated at about $190,000.
When liability for these damages was denied by the pest control
company under the general pest contract, the customer became
a claimant, and filed suit.
With the passing of 17 years, the pest control company was
unable to locate any contract information stating that the
service contract was a general pest control contract and did
not include termite. In addition, an industry expert indicated
that the termite damage was visible and obvious.
Lesson:
- A contract is a legal document that details the
agreement between the customer and the pest control company.
- Always use specific language to spell out services
and avoid generalizations. Boiler plate language counts.
- Before proceeding with service, be certain a contract
actually exists and is executed (signed by both parties).
- Be certain your contract has a deadline or ending
date.
- Be certain to maintain your contracts in organized
files so that you can review them regularly and refer
to them as time passes.
In this case, the contract that was misplaced or destroyed
could have substantially controlled or perhaps eliminated
the $100,000 payout that was eventually made to this claimant.
Be certain to review and renew old contracts making appropriate
changes upon review. Contracts are legal documents that
must be maintained over time. In pest control, customers
finding damage will look to the company who promised to
keep their home or business "pest free", to repair
that damage. If we are unable to produce our written agreement
with that customer, the specifics of our "promise"
are left to the selective memories of the parties involved.
Please discuss the importance of contract retention and
maintenance with your team. Reiterate the need to have a
contract executed prior to beginning service.
Please share and discuss this Loss Lesson with your entire
team so they can apply the knowledge in the field and we
can all learn from this event.
Linda Midyett
Area Manager
Safety and Loss Prevention, PestSure
Arthur J. Gallagher Risk Management Services, Inc.
14241 Dallas Parkway, Suite 300
Dallas, TX 75254
972.663.6199
800.326.6203
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