[Bed Bug Supplement] Tiny Pests, Huge Claims

Until about five years ago, bed bugs were largely the stuff of bedtime sayings. “Sleep tight, don’t let the bed bugs bite.” Now, these tiny pests have emerged as a big nuisance throughout the country, with infestations affecting neighborhoods from New York City to Seattle.

With the emergence of bed bugs has come a new set of concerns — and risks — for pest management professionals. As we approach 2013, the time is right to review what we’ve learned over the past several years about the treatment of bed bugs, the risk involved and how you can protect your business against customer claims.

More bugs, more claims. As PMPs are acutely aware, the insect commonly known as the bed bug (Cimex lectularius) has made a dramatic comeback in recent years. For example, confirmed infestations in New York City rose from 82 in 2006 to more than 4,000 in 2010. PMPs reported a 100 percent increase in bed bug related calls over the same period, and these stubborn bugs are being found everywhere from homes, hotels and cruise ships to apartments, churches and nursing homes.

When bed bugs first emerged, PMPs found they often had to apply three or more chemical treatments to eradicate them, which raised concerns that bed bugs were growing resistant to chemicals. Extermination challenges are pronounced. As a result, heat treatments emerged as a popular treatment option — although we learned that heat had very specific requirements and did not always work on the first treatment.

Although bed bugs have not been shown to transmit disease, the bites can be irritating physically and troubling emotionally. That’s why customers whose infestations are not eliminated on the first treatment come back to the PMP with claims we don’t see in infestations like termites — claims for bodily injury, emotional distress and loss of revenue.

In addition, if the temperature of a heat treatment is too low, it can fail to eradicate the bugs and eggs, and if the temperature is too high, it can damage property in the home or business where you are working. The combination of new treatments, unpredictable results and distressed customers makes it more important than ever to manage customer expectations, take steps to mitigate your risk and update your insurance coverage with the right protections.

Limit your exposure. Fortunately, you can take a number of steps to limit bed bug-related claims against your business. Managing customers’ expectations and documenting your work are paramount in bed bug risk mitigation. Some tips on doing so:

• Let customers know in advance that it can take more than one treatment to eradicate bed bugs. This simple conversation can go a long way to preventing a claim if the first treatment does not work.
• Tell them that they may need to discard heavily infested furniture, steam clean carpets and upholstery and wash bedding materials every time bed bugs are found.
• Have customers accompany you on initial, room-by-room visual inspection. This helps the communication process, gives customers a chance to point out infestations and gives you a chance to discuss the options.
• Document the inspection. Take photographs and provide a written description, and have customers sign off on it. Take several photos of each room (mattress, carpet, pillows, etc.) so there is proof that bed bugs were either present or not at the time of your inspection.
• Develop a detailed contract specific to bed bug treatment. This includes the above expectations and states you are providing a one-time treatment and are not liable for damage, injuries or any kind of losses to third parties. Plus, it should have language that applies specifically to bed bugs. This contract language gives you a better chance of defending yourself successfully if there is a claim.

Thermal heat treatments have their own unique risks and specific requirements for safe use. While PMPs have refined their heat treatment techniques, it is still important to follow certain precautions.

• The operating manual is not enough. Heating equipment must come from manufacturers who have a good reputation and who offer training.
• Training should indicate what the customer is responsible for removing from the house and how. If customers remove potentially infested items before a heat treatment and then reintroduce them, they may also reintroduce bed bugs.
• Monitoring the correct temperature is critical to success. You must set the optimal temperature, spread the heat throughout the affected areas, and maintain a steady temperature to be successful.

As with any bed bug treatment, your contract should clearly state that there are no guarantees, and that multiple treatments may be required. While heat is proving to be more successful than other treatments, every PMP knows how difficult bed bugs can be to eradicate.

Cover yourself. You need to be aware of and make sure you have specific types of insurance coverage when performing bed bug inspections or eradication services.

First, you must have adequate pest inspection coverage. This coverage is designed to protect you if you fail to detect the obvious presence of bed bugs during your inspection. Be aware that some insurance companies may offer inspection coverage as a “sublimit,” meaning a limit lower than the actual occurrence limit shown on their policy declaration page.

Often overlooked is “care, custody and control” (CCC) coverage, but this is an essential coverage when treating bed bugs. Keep in mind that the standard Commercial General Liability (CGL) policy excludes damage to property in the “care, custody and control” of the insured. You need a CCC endorsement to ensure you are protected in case there is any damage to a home or business where you are working.

Make sure your policy includes this endorsement and that it is not watered down. You want full limits and coverage for personal property, not just real property. This will cover you if any property needs to be replaced because your work was incorrectly performed.

In addition, make sure you have proper coverage for pollution liability. When chemicals are used to treat bed bugs in hotels, motels, apartments, cruise ships and other locations, the potential for chemical-related bodily injury increases. Proper coverage is very important, and it is best to have the coverage provided at the full policy occurrence limit.

Finally, more and more PMPs are using pest-detecting dogs to confirm bed bug infestations. These dogs are valuable employees and pest control businesses invest thousands of dollars for each one. So just as you would want to protect other valuable investments, consider animal mortality coverage to protect your investment in the event the dog suffers an unexpected death.

Monetary damages. One type of claim we have seen increase dramatically is a customer who is seeking monetary damages. These types of claims have been appearing more and more frequently in the hospitality industries when a bed bug treatment proves to be ineffective due to negligence.

For example, if a hotel needs to close rooms more than once for treatment, they may hold the PMP responsible for the lost income and other expenses that may result from the rooms being unavailable for their guests. This could happen at a summer camp, a movie theater, restaurant or other types of businesses that can potentially lose income due to a PMP’s negligence.

You can protect yourself by selecting an insurance policy that specifically covers monetary damages. Since this is a new concern for PMPs, the coverage is not widely available and is typically added as an Errors & Omissions (E&O) endorsement.

Find the right partner. With the new risks presented by treating for bed bugs, it is important to understand how to mitigate them and find the coverage you need. Not all insurance coverage is uniform and one size does not usually fit all. You should have help.

An insurance agent or broker can serve as a valuable liaison between PMPs and insurance companies, helping you to understand the coverage and limits you need, as well as the specific risks your business faces. If you have not updated your insurance coverage in response to bed bugs, you should take action. Don’t let the bed bugs bite you in the wallet.

John Culotta is a program manager of PCOpro, the pest control operator program at Brownyard Group (www.brownyard.com), a leading program administrator providing specialized insurance coverage for select industry groups. He can be reached at jculotta@giemedia.com.