You’ve worked hard to start and grow your tree care business. You’ve gained the knowledge and experience necessary to properly and safely work with trees, you’ve bought the equipment needed to do the work, and you’ve hired employees as ground crew, climbers, arborists, spray techs, and more.
But how is your business protected? What would happen if you couldn’t work because of an injury or other catastrophic event? Do you have enough cash reserves to replace or repair damaged or lost equipment? What if you were sued by an employee or unhappy customer?
Tree care is dangerous work that puts you and your business at risk. Learn more about the kinds of risks tree service professionals face, real-life examples, and ways to reduce the risks.
If the above questions make you uncomfortable, then it’s time to take a close look at your tree service insurance coverage. The right type of tree service insurance is key to protecting you and your business.
So what is the right type of policy for an arborist or tree care professional? Is it one policy, or multiple ones? Which types of coverage are most important?
Types of Tree Service Insurance Policies
There are several types of insurance to consider if you are in the tree service industry.
Remember that specific policies will vary and are based on your business’s particular needs. Work with an insurance agent to determine the right tree service insurance package for your company.
Some of the coverage options your insurance agent may recommend include:
- Commercial general liability insurance
- Professional liability insurance
- Commercial property insurance
- Commercial auto insurance
- Inland marine insurance
- Workers compensation insurance
General liability insurance may be the most basic of coverages, but it is one of the most essential components of protecting the survival of your tree care business. While this type of coverage is particularly important if you have significant dealings with the public (including customers, vendors, and bystanders), the sad truth is that in today’s litigious society, EVERY business should protect itself against the chance of lawsuits.
What does commercial general liability insurance cover?
General liability coverage is designed to protect your tree service business from third-party claims, such as injuries or property damage caused by you or your employees while on the job, or while driving to or from a job site. It will also cover any legal claims that come with these losses; if you lose a lawsuit with an injured customer, employee, or vendor, your general liability insurance policy kicks in. This includes physical injury or a financial loss.
Example: You accidentally damaged your client’s home while taking out a tree and the homeowner decides to take legal action against your company. In this situation, your insurance carrier would help to cover expenses arising out of necessary litigation, settlements, or repairs.
This type of business insurance is also known as malpractice or E&O. It protects you against claims that your business gave poor advice, recommended services that were not necessary, or that you were negligent in some fashion when providing services.
What does professional liability insurance cover?
Your policy will cover the damages that can arise from major blunders, especially in high-stakes situations where errors can be devastating.
A property insurance policy insures your tree service business against damage to your buildings and any contents due to a covered cause of loss, such as a fire. The policy may also cover loss of income or increase in expenses that result from property damage.
What does commercial property insurance cover?
Any damages to your business property would not be covered under a general liability policy. This is where commercial property insurance steps in. It gives protection for all of the physical parts of your business: your building, any inventory, and equipment, giving you the reserves you need to replace them in the event of a loss.
Example: The warehouse you use as the main office for your business is severely damaged by a fire. Additionally, some of your work equipment was damaged while being stored in the warehouse. Your property insurance would cover the physical structure itself, as well as the equipment you have stored inside of it.
A commercial auto insurance policy provides coverage similar to your personal auto insurance. However, it is specific to your commercial vehicles, such as cars, trucks, vans, as well as employee drivers, none of which are typically covered by a personal auto policy.
What does business automobile insurance cover?
This type of insurance covers vehicles being used for business purposes, from fleets of business-only vehicles to a single company car. In some instances, it might cover your car or your employee’s car while they’re used during the course of business. Commercial auto policies are written with higher limits than personal policies, assuring you can cover your expenses if one of your tree service vehicles gets into an accident.
Example: One of your employees is driving a work truck back from a tree care job. While traveling, your driver rear ends another vehicle at a stop light. Your commercial auto liability insurance would cover the vehicle, as well as any property damage incurred during the accident. A personal auto insurance policy will typically not cover your work vehicles – even if the driver is off duty.
Despite the name, inland marine exposures for tree care companies have nothing to do with boats or water. Instead, the term “inland marine” refers to any of your business equipment, goods, or tools (e.g., chipper, skid steer, stump grinder, chainsaw, ladders, pruning shears, etc.) that you transport over land from your premises to the job site.
What does inland marine insurance cover?
This type of policy protects equipment and cargo that you transport from your yard or storage facility to a job, or from one job site to another. If any of your tools or equipment are destroyed, stolen, or damaged during transit, your inland marine insurance would typically provide protection. These policies vary by insurer, so it’s a good idea to discuss the specifics with your agent.
Example: On the way to remove a tree, you make a stop before getting to the jobsite. While away from the vehicle, some of the tools you were transporting are stolen. In this instance, Inland Marine insurance would cover the cost to help replace the stolen tools and equipment that was in transit.
This coverage (often called worker’s comp) is intended to protect the business and its owner(s) from claims by employees who suffer a work-related injury, illness, or disease.
All states require workers’ compensation insurance but the requirements vary from state to state. Some states mandate that all businesses carry workers’ comp (regardless of the number of employees), while others give the owner discretion to not have insurance until there are a specific number of full-time employees. Check with your insurance agent and/or the state for details.
Given the high level of risk in the tree care industry, we strongly recommend that all tree service companies carry workers’ compensation insurance – even if you’re the only employee.
What does workers’ compensation insurance cover?
A workers’ comp policy will cover job-related injuries or illnesses and lost income arising from those injuries or illnesses. If any of your employees are injured or fall ill on the job, this coverage will kick in and cover the costs associated with treatment. Some policies may also cover lost wages for employees while they are out of work, any training that may be necessary for a new line of work in the instance the employee cannot return to their previous position, or permanent partial or permanent total disability.
This type of insurance policy also covers legal defense fees you may incur if an injured employee decides to take any legal action.
Example: An employee was injured by a tool that you failed to properly maintain. The employee files a lawsuit against you. The workers’ compensation policy would pay for any associated medical care, legal fees, and lost wages.
Other Types of Insurance for Tree Care Business Owners
There are many other types of insurance coverage available to arborists and tree care professionals. Talk with your insurance agent about some of the more specialized forms of small business insurance to cover your specific problems and risks. These forms of insurance may include:
- Commercial Flood Insurance
- Contractor’s Insurance
- Business Interruption or Loss of Income Insurance
- Directors and Officers
- Environmental or Pollution Liability
- Crime Insurance
- Cyber Liability
- Data Breach
- Employment Practices Liability
- Sexual Misconduct Liability
- Management Liability
Business Owners Policy (BOP)
This is a policy created for small, low-risk businesses. It simplifies the typical insurance buying process by consolidating general liability policies with business income and commercial property insurance.
Commercial Umbrella Policies
Think of this policy as an extra layer of protection. In the instance a court decision or settlement exceeds your limits on your general liability policy, it extends those limits.
Bonding is a contract where one party, the SURETY (who assures the obligee that the principal can perform the task), guarantees the performance of certain obligations of a second party, the PRINCIPAL (the contractor or business who will perform the contractual obligation), to a third party, the OBLIGEE (the project owner who is the recipient of an obligation).
Is Liability Insurance Worthwhile for Tree Service Companies
Perhaps you believe your tree care business is so low risk that commercial liability insurance doesn’t make statistical sense for you. In which case, ask yourself a few questions.
- Do you do work that could damage nearby structures or objects, or injure people?
- Does your business have a common area, such as a storefront or reception area?
- Does any part of your business involve the operation of heavy equipment?
- Do your employees often drive as part of their job-related activities?
If you answered “Yes” to any of these questions, then you aren’t as low-risk as you think, and passing on general liability insurance is not an option. However, even if you answered “No” to all of the questions, you should still consider protecting yourself with a general liability insurance policy.
Why Protect Yourself With an Insurance Policy?
- In the event of any sort of incident, the opposing attorneys are more likely to act responsibly if they know they have to deal with a huge insurance company instead of an isolated business.
- Individuals can legitimately hurt themselves or cause accidents in an unlimited number of random ways.
- You’ve got enough to deal with trying to make an honest living without having to worry about lawsuits falling out of the sky.
- In some jurisdictions, courts have held that property owners are liable even for injuries to trespassers and thieves.
It’s important to find an insurance professional who specializes in matching tree care businesses like yours with the most appropriate policies for your commercial insurance needs.
To learn more about tree service business insurance requirements and costs for general liability, business property, commercial auto, and workers’ compensation, reach out to us today.
Keep your tree service business protected with an insurance partner you can trust.