Tree service businesses face an above-average liability risk. Because of the inherent dangers involved in tree trimming and tree care, it’s a good idea to have general liability insurance to protect your interests as a business owner or arborist while also making it easier to compensate for unforeseen damages to others and their properties.
What Does General Liability Insurance Cover?
According to the Insurance Journal, the average customer injury or damage claim is around $30,000. But that figure is for all industries combined. Arborists and tree care workers see more than their fair share of claims, resulting in higher liability payouts.
Because tree trimming businesses perform work that occurs at other people’s homes and businesses, third-party damage or injury can occur.
Tree service general liability insurance typically offers coverage to help repair any damages that can occur due to your company’s work on a property. It will also help pay for your customer to receive medical treatment if they’re injured because of your work.
The three primary areas of coverage in general liability insurance are:
- Property damage to others
- Injuries to third parties
- Advertising injuries
General liability coverage will also provide coverage to your business if a client or someone outside of your business sues you.
When you consider all of the things that can go wrong in your business’s line of work, general liability insurance can offer you the peace of mind you need to go about your daily work without the added worry of paying for any damages if they occur.
Examples Where General Liability Insurance Would Benefit Your Tree Service Business
More accidents and mishaps occur in the tree service business than in many other industries. Arborists and tree trimmers are among the top-rated, most dangerous professions in the U.S. When you think about the functions performed in the business, it’s no wonder.
Powerful equipment is used to perform many tree care tasks, easily creating scenarios where damage can occur to property. Accidents or even death are other unfortunate incidents that can occur.
Let’s look at some common examples:
When a limb or tree is cut, literally thousands of pounds of wood can snap to the ground. Unfortunately, there are misses, and limbs don’t always fall where planned. This could mean a limb crashing into a home, causing tens of thousands or even hundreds of thousands of dollars in damage.
Property damage may not be that dramatic. For instance, the damage could be more minor and just take out a window. Many tree service businesses experience many more minor claims and an occasional larger claim. But that one larger claim could be enough to leave your business vulnerable.
A general liability insurance policy can protect your business from liability claims and help pay for the damage, depending on the limits chosen for your business’s liability policy. If your client decides to sue, the policy would also help cover any legal expenses you might incur.
Bodily Injury to Third Parties
Suppose a client walks out onto their property, either during or shortly after you’ve done some tree trimming, and one of your company’s tractors leaves behind a deep hole. The client trips over the hole and falls and injures their back.
Having general liability coverage in place could help pay for medical expenses related to their accident if they decide to make a claim against your business. Once again, if they opt to sue your tree service business, a general liability policy would help pay legal fees and possible settlements on your behalf.
What’s more, if a third party dies from a fatal accident resulting from your tree company’s work, a liability policy would cover funeral expenses.
One thing worth pointing out is that a general liability insurance policy will only pay for third-party injuries, which is an injury occurring to someone that doesn’t work for your business. That means you’ll likely also want to look into workers’ compensation to cover any employee injuries that might occur.
Many tree trimming businesses and arborists don’t give much consideration to advertising injuries. But these types of damages do unwillingly occur and can render significant harm to a company.
An advertising injury occurs when advertising your business’s products or services and can include:
- Violating rights to privacy
- Libel and slander
- Violating copyrights
- Using someone’s idea in promoting your tree service business
Because many businesses market on the internet these days and in newspaper ads, advertising injuries occur more than ever. A social media post might unintentionally be misinterpreted and could create legal problems for you.
Let’s look at a couple of examples of how easily your tree care business might find itself in hot water for an advertising injury:
Example 1. Let’s say one of your tree service workers believes a client poorly treated him. So he makes a post about it on his personal social media page. But the employee happens to be friends with one of the client’s friends, and before you know it, you’re the one getting sued. Liability coverage can help pay for this sort of advertising injury.
Example 2. You probably take pictures of the work you’ve done from time to time, right? Let’s say down the road you use one of those pictures in an advertisement, not giving it a second thought. But the client doesn’t remember you asking permission and decides to sue. Once again, general liability insurance coverage has provisions for this.
The point is that many advertising injuries simply happen because of human nature. But, it’s good to know these goofs and mistakes are covered if a client takes issue with your tree care business.
Errors and Omissions: An Added Layer of Protection to Manage Your Risks
In addition to general liability insurance, tree service companies need errors and omissions insurance to help with their risk management. This type of insurance will help pay for court costs to defend your tree business if a client says work wasn’t done as described or contracted.
Most mistakes made by tree companies are honest mistakes that could happen to anyone. Owners of tree companies are often filled with regret over something that could have been avoided.
The problem is that clients are often unforgiving with mistakes of these magnitudes and will waste no time in filing a lawsuit against the tree service company that performed the work.
One of the most common claims made against tree care companies is that a tree that was supposed to be cut down is missed and falls a few months later, causing damage to the client’s home.
There are other examples of errors and omissions that could fall under this scope:
- Tree service companies have been known to cut down the wrong tree, only to have a client suing them for tens of thousands of dollars because, in their eyes, the tree is irreplaceable. Some homeowners will even claim a loss of property value due to the tree being gone. Others have even resulted in a plaintiff receiving monetary awards because they feel cutting down the wrong tree diminished the aesthetic appeal of the property and caused them mental anguish.
- A homeowner may want to clear some of his or her property but is on a budget and can only do so much right now. They may ask your advice which ones are in the poorest shape and contract you to remove those. A month later, one of the trees left standing might split during a thunderstorm, with part of the tree going through their roof. Nature sometimes determines things, but a homeowner might see it differently and decide to sue your tree company for not removing that particular tree.
- Suppose there are two trees within very close proximity, but one tree is part of your client’s property, while technically, the other tree is part of a neighbor’s property. Your tree workers cut down the neighbor’s tree by accident. This would be considered an error, and your tree company can potentially be held liable for the cost of the felled tree.
Transfer some of the risks with a detailed contract
One of the first things you can do to manage your risks is to have a contract that clearly outlines and documents the services a client wants you to do. Here are some suggestions:
- Mark which trees are to be removed. If the client is contracting you to remove any trees, walk around the property and mark the trees to be cut down in front of the client or have them do it. Then have a clause in the contract stating that the client agrees this was done. This helps to transfer some of the risks to the client and makes it harder for them to come back later and say the wrong tree was removed or a tree was missed.
- Set expectations. Have a general maintenance or service agreement, clearly outlining what the client can expect from your tree service company. Be accurate, so there is no room left for interpretations. Does the client want stump removal in addition to the tree removal? Or do they want to save money and just have it cut very low to the ground, leaving a small stump? Can they only afford $3,000 worth of work, leaving some more vulnerable trees left on the property? Have a clause stating that they can’t come back on you for any trees left behind that could create damage later on.
- Define your responsibilities. If your contract involves regular servicing of the property in question, be clear about your duties versus the property owner’s responsibilities. For instance, are you maintaining the property and choosing which trees to cut down, or is the owner directing you which trees they want to be cut? If you’re in charge, have something in the contract stating that the client is to notify you if something changes, for instance, if a storm damages a tree. Include sentences such as the property owner will “hold your company harmless if a tree falls in between servicing because of a storm” or other event. At the same time, if you’re inspecting the property and determine a tree is likely to potentially fall and recommend removal of the tree, give your client notice of your findings in writing so they can’t come back later on and say you didn’t warn them.
- Include contact terms. A service contract should also include the frequency of which you will inspect or maintain the trees, conditions of payment, insurance information, and liability clauses whereby you accept some of the risks but place others in the owner’s hands where it makes sense.
Obtain advice from an experienced tree insurer for other ideas on what you can do to minimize or transfer some of your tree company’s risks.
The more risks you can transfer back to the client through a contract, the less risk you take on for your business. This, in return, will lower your insurance costs and other potential expenses down the road.
General Liability Insurance FAQ’s
Won’t my client’s homeowner’s insurance policy cover some claims, for instance, damages to their home, even if my tree service business is responsible?
The short answer is no. Your client’s homeowner’s policy will cover damage from fire, theft, or a storm. It will also protect their interests if an accident results in an injury or death because of their negligence. But your tree service business should have protection against claims made by third-parties because of work you or your employees performed. Otherwise, without adequate general liability protection, your business and livelihood are at risk.
How much will general liability coverage cost my tree service business?
Many factors can affect how much your general liability insurance policy will cost your tree trimming business. For instance, where you live makes a difference because some states, for whatever reason, have a higher rate of tree trimming accidents. If you live in one of those states, your liability policy is likely to cost more. The limit and deductible you choose for your liability policy also affect your premium cost. Lower deductibles and higher limits will cost more, while higher deductibles and lower limits will cost less. Your tree company’s prior claims’ history also factors in, as do other considerations that help an insurance company determine the level of risk in insuring your tree service business. What’s beneficial to you as an arborist or business owner is that the right insurance company can tailor and customize coverage to your needs while helping you obtain an affordable policy that offers protection for your business.
What type of coverage limit should I get for my tree care business?
The correct answer is whatever you can afford. A policy limit with a minimum of $1,000,000 in coverage limits is usually recommended. A higher limit on your general liability insurance policy offers you more comprehensive coverage in the various areas of your policy, meaning your business is more protected against larger claims and settlements.
Am I required to have general liability insurance for my tree service company?
State laws vary in requirements for general liability insurance for tree businesses. But, there are a couple of things to remember. Firstly, one lawsuit or liability claim against your company can significantly impact your business’s operations if you don’t have insurance. All of the sweat equity and money you’ve invested in your tree care business can be erased if a court decides against you and you don’t have adequate insurance. Secondly, many clients will only hire licensed and insured tree trimming companies. Insurance offers an added layer of trust for your business, and others view insured companies as more reputable than businesses that aren’t insured.
Does my tree company need other types of small business insurance besides general liability coverage?
Most likely. For instance, if you have employees, you’ll want to explore workers’ compensation coverage because most states require it. You may also need professional liability coverage, commercial vehicle insurance, commercial property insurance, and others, depending on the scope of your business. It’s best to consult with an experienced insurance agent specializing in providing coverage to tree service professionals to identify which types of insurance would benefit your business. In many cases, an insurance company can bundle various business policies and lower your premiums.
Your tree service business does dangerous work day in and day out that is not without significant risks. There are all kinds of things to consider, right down to your professional reputation and what you can do to mitigate your business’s financial risks.
The simple truth is that your livelihood can be significantly impacted by property damage, personal injury, or libel claims. That is, if you don’t have sufficient general liability insurance coverage to help manage your risks.
In short, general liability insurance:
- Protects your tree care business from costly claims.
- Pays for damages or injuries that might arise from unintended negligence on the part of your tree trimming business or its workers.
- Enhances your reputation and helps clients feel more comfortable about hiring your company.
A general liability insurance policy can help safeguard your tree service business against many unexpected events that could otherwise threaten your business. In many states, it’s also required.
An insurance company specializing in tree service insurance is your best bet in finding the coverage your business needs against general liability claims.