Insurance Business and Insurance Questions

brianidaho · Dec 11, 2008

I did some searching on insurance here, mostly what I was finding was coverage of the tractor when used for personal use. I'm buying a new tractor, it will be used for maintaining my property, but I want to also take on some outside work, hopefully enough to help with payments. I'm hoping you can give me suggestions with respect to insurance and liability issues.

In order to qualify for the tax writeoff, and to limit liability, I have been advised to file as a LLC. I just did so today, as well as filed for a EIN for the company. My understanding it that the LLC's assets are all that are liable under this structure. Are there any special issues involved with regard to personal use of the business asset?

Also, what should I be looking at for liability insurance, and what should I look to pay? In addition to the liability issues, I'll need coverage for the usual collision/comp/theft etc items you would normally have for auto insurance.

Tractor is 32HP, primary commercial uses will be snow plowing, road grading, bush hogging and FEL work.

Also, when agreeing to do business for a customer, do you do any kind of contract or liability release? One item that concerns me is potentially hitting burried items when snowplowing, I don't know what I should look for here. If the customer doesn't tell me where hidden stuff is, am I liable? I'm thinking a sketch of the roadway/parking area, identification of any "special" concerns and customer signoff wouldn't hurt.

Thanks for any thoughts.

Bri

JMER817 · Dec 11, 2008

You might want to try another forum site called lawnsite.com or lawncafe.com.

MarkV · Dec 12, 2008

Brian when I looked into insurance for outside work my agent referred to it a landscapers insurance and as I recall it was about 4-500 per year. This type of insurance did stipulate a limit on the depth of ground engagement. A backhoe or trencher exceeded the limits and required contractors insurance which was closer to $2500 per year. Fiber optic line, gas lines and such are expensive to repair. It has been a number of years since I looked into it so I have no idea what pricing would be now.

MarkV

JD Greg · Dec 12, 2008

I just took out insurance for similar work.
I have a JD 2305. I only do mowing and a few snow blowing jobs.
I did not establish and LLC, just a small business.
Full replacement value of the tractor and equipment and a 1 million
liability protection for $340 a year.

JB4310 · Dec 13, 2008

Brian,
Sounds like you would be fine with that landscapers policy, if your not doing any excavating. I don't think you needed that LLC filing, now you may be obligated to file more complicated returns and have min taxes due.
As far as limiting liability, a good lawyer will "pierce the Corporate vail" of a sole proprietor type LLC pretty easily.
You asked about personal use of corporate assets, that's where they get you. The first rule of corporate protection is "no co-mingling of assets" which is kinda hard when all you own in the LLC's name is kept in your garage.

Insurance guys will tell you no need for LLC as long as you have high liability limits. A lawyer will usually tell you that you need the LLC.

Good Luck, JB.

brianidaho · Dec 13, 2008

Thanks for all the information. The LLC advice was from an accountant, sounds like I might have made a mistake already going that way.

JDGreg, can you tell me what insurance company you used? That price seems good, State Farm wants $300 for full replacement, essentially comp, collision and lability, but this does not cover commercial use.