Trimming trees is a dangerous business, but having workers comp for tree service will ensure your workers have the protection they need if something goes wrong.
Do you have the right insurance for your tree service? Trimming branches, clearing overgrowth, and removing dead trees are all vital services.
However, there’s nothing safe about repelling from branch to branch. All it takes is a broken twig or a slip of the foot for a tree trimmer to lose their balance. And the injuries they may sustain can range from minor to deadly. Business owners need workers’ comp to protect both their hardworking employees and themselves.
Finding workers’ compensation coverage isn’t always easy. Working in a known high-risk industry makes insurers leery about selling you a policy. Even if you do manage to find a suitable plan, you may find yourself overpaying for coverage.
At Coastal Work Comp Brokers, we work with all types of high-risk and high-mod industries, including tree services. And we may be able to save you 30-40% on your premiums.
Our pay-as-you-go plans will even help you avoid the dreaded annual insurance audit. Best of all, you don’t have to sacrifice quality to get the coverage you and your employees deserve.
Why Are Tree Services Considered a High-Risk Industry?
Tree service is one of the most dangerous jobs. As a business owner, you put safeguards in place to protect your workers. Perhaps you include safety training, or maybe you upgraded your equipment.
However, accidents can happen in the blink of an eye. Even your most skilled employees are at risk of sustaining a work-related injury.
Most tree trimming companies report at least one on-the-job accident each year, and some have numerous claims. Unfortunately, many of the injuries in the tree service industry are severe or even fatal.
Here are some of the most common injuries:
- Falls from tree branches or ladders
- Cuts and scrapes while using hacksaws or chainsaws
- Insect stings and animal bites
- Eye injuries from sawdust or wood chips
- Impact injuries from falling objects, such as tree limbs or branches
- Electrocution when working near power lines or water
- Amputations while using power tools or heavy equipment
Many of these injuries require a trip to the emergency room, and some of them prove deadly. Fatalities in the tree service industry are higher than in other job sectors. And even when employees do survive, they may have lingering symptoms or permanent disabilities.
Insurance companies view the tree trimming industry as high-risk for this very reason. It’s not uncommon for private insurers to deny coverage to local companies. Those who do manage to get a policy may end up paying exorbitant premiums.
What Kind of Insurance Does a Tree Service Need?
Every tree removal, trimming, or pruning company needs to protect its business with the right insurance policies. Tree service insurance requirements vary by location. But most states require coverage before you can send employees out in the field.
At the very minimum, a tree service should carry liability and workers’ compensation insurance.
General liability insurance covers many of the basic risks that tree services face. These include property damage or bodily injury while performing job-related tasks. If you want even more protection from client loss or negligence, you may consider buying a professional liability policy.
Tree trimming companies should also buy workers’ comp coverage for every employee. Workers’ compensation pays for any medical bills, lost wages, and disability due to an on-the-job accident.
This type of coverage protects your employees, your clients, and yourself. Besides, it’s the law in most states.
How Much Is Liability Insurance for a Tree Service?
It often surprises business owners to learn how much liability insurance costs for the tree service industry. For example, if you operate a small company, you may only pay $400 in premiums each year.
On the other hand, if you run a large-scale operation, your liability insurance premiums could reach $1,500 per year for $1 million in coverage.
The premiums an insurer quotes depend on several factors, including the size of your company and how many workers you employ. Your location, deductible, and per-occurrence limit also play a role in how much you’ll pay for coverage. Umbrella policies for professional or product liability insurance will also increase your rates.
How Much Is Workers’ Comp Insurance for a Tree Service?
The cost of workers’ compensation insurance for tree service jobs varies from business to business. How your company operates and your claims history determine how much you’ll pay each year.
To simplify everything, the National Council on Compensation Insurance (NCCI) assigns a class code for every job. Most tree trimming and removal companies have a class code of 0106.
Some jobs fall under more than one class code, especially those with multiple duties. It’s essential to list every class code on your insurance policy.
Insurers use this code, along with your payroll and experience modification rating, to figure out your premium.
The general formula for pricing an insurance policy is:
Class Code Rate (X) Employer Payroll (X) Experience Modification Rating (=) Premium
High-risk industries, such as tree services, have a higher class code rate. The experience modification rating acts as a credit score for a business. Your rating starts low, but each time you have an accident, the number goes up.
Every company pays a set amount per $100 of their payroll. Many tree trimming companies pay $25-50 per $100 in wages on workers’ comp.
With this formula, it’s easy to see why premiums are so high in this industry. Furthermore, your insurance rates vary depending on your location. If you want to open your business in multiple regions, it’s smart to check workers’ comp rates by state to compare prices.
Where Do You Purchase Workers’ Compensation for Tree Services?
No tree service should operate without proper workers’ comp coverage. It’s only a matter of time before someone gets hurt on-the-job, and you need to make sure you have protections in place.
However, buying a policy isn’t always as easy as it sounds. You have a few options to consider: private insurance, State Fund, or PEO.
Private insurance is usually where most business owners begin. After all, they tend to have competitive rates. Private companies also offer the most benefits, and many have customizable plans. But since the tree service industry is high-risk, insurers may reject your application. And those who do offer coverage may charge an arm and a leg.
State Fund coverage is an option for high-risk businesses that are unable to obtain coverage elsewhere. Legally, the government must offer state coverage to any company that applies. Even those with coverage lapses or a history of accidents can buy a plan from the state. However, if you choose to purchase a policy through the State Fund, you should expect higher premiums. In most instances, their rates are the most expensive.
PEOs are another way to purchase a workers’ comp policy in the tree service industry. At Coastal Work Comp Brokers, we can help you get the right amount of coverage for your business.
Our plans may be a good fit if:
- You currently employ 5-500 workers.
- You want to lower your premiums.
- You want to get out of the State Fund.
- Your last carrier didn’t renew your policy.
- You work in a high-risk industry, such as tree service.
- You have a high experience modification rating, losses, or gaps in coverage.
- The annual audit gives you a headache each year.
No matter your current insurance situation, Coastal Work Comp Brokers can help. We’ll prequalify you and shop around for the best plans. Even if you have accidents on your record, we know how to keep your premiums low.
Can You Buy Workers’ Comp with No Employees?
If you operate a tree service by yourself, you may be exempt from buying workers’ compensation. However, many insurance companies will offer coverage to small businesses, even if they don’t have any employees. It’s not a bad idea to go ahead and purchase a policy.
Sure, avoiding workers’ compensation may save you money right now, but if you hurt yourself at work, it could cost you everything. Medical bills are expensive. Most health insurance policies do not cover work-related injuries. And if you need long-term care, you may find yourself at a dead end.
Do Subcontractors Need Workers’ Comp?
Companies only need to carry workers’ comp on their employees. This rule includes all full-time, part-time, and seasonal workers. It doesn’t matter if the employee has a salary or gets paid by the hour.
However, the government does not recognize independent contractors as regular employees. Therefore, if you hire subcontractors, you do not need to carry them on your policy.
Too many companies misclassify their employees as subcontractors, however. This mistake happens far too often. Some business owners misclassify on purpose to avoid paying for insurance. Others obtain a ghost policy or fake workers comp certificate to make subcontractors think they have coverage.
All these scenarios are a disaster waiting to happen—and it’s illegal. Always double-check with your region to make sure you don’t mislabel any of your independent contractors.
Subcontractors need to protect themselves and buy liability insurance before they go to work for a tree service. Having coverage protects independent contractors from lawsuits and medical bills. They should also familiarize themselves with the local rules of self-employment.
After all, if they behave in the same manner as an employee, they deserve the same benefits.
How Much Does It Cost to Start a Tree Service Business?
If you aspire to start a tree service business, it’s important to realize that it’s not a cheap process. There are a lot of costs involved—from renting a warehouse to buying professional equipment. Of course, you can’t forget to include the prices of liability and workers’ compensation insurance.
So, how much should you have on hand? On average, it costs between $10,000-50,000 to start a tree business from scratch. And that number doesn’t include the ongoing costs.
You’ll need to have enough money to hire and train a talented staff. Vehicle maintenance, equipment upgrades, and marketing will also increase your spending.
But, tree services can make decent money. There is a considerable demand for this type of specialized work. Even after expenses and taxes, many tree businesses bring in an annual profit of $50,000 or more. And the larger your company grows, the more money you’ll be able to pocket.
What Do I Need to Know When Hiring a Tree Service?
Consumers need to be careful before hiring just any tree service. After all, you don’t want to deal with property damage when they leave. In addition to getting quotes from a few providers, make sure you ask to see proof of insurance and their tree service license. Reliable companies will provide you these items without batting an eye.
Never let anyone do work on your property without insurance. If a worker falls out of a tree, for example, they can sue you for damages. And if they destroy your yard, you won’t have any recourse for monetary compensation.
The best arborist insurance protects both the customer and the business in the event of an accident.
Affordable Workers’ Compensation for the Tree Service Industry
Why is workers’ compensation insurance so vital in the tree removal industry? Accidents are unpredictable. Not only can you lose your best employee to a work-related injury, but the costs for treatment may bankrupt your company. Running a tree service without adequate workers’ comp is never a wise choice. Besides, nearly every state requires coverage.
Many tree service businesses, however, find the cost of coverage is often more than they can stomach. Here at Coastal Work Comp Brokers, we can help you get a better rate on workers’ compensation insurance for landscapers and tree trimmers.
Coastal Work Comp Brokers specializes in high-risk, high-mod, multi-state risk, and niche industries. Even if you can’t get private coverage due to a lapse in coverage or non-renewal, you can count on us.
We welcome both established tree services and new ventures with open arms. With a pay-as-you-go plan, you’ll only pay for the coverage you need. And best of all, you won’t ever have to deal with an annual audit again.
Call 323-543-4141 for expert help in finding the best workers’ comp option for your tree service.