Looking into small business insurance and need advice/have some questions.

[Piston]

I called my current insurance provider (USAA) to get a quote on small business insurance for a 'side' business I'm starting. It will include mowing, stumpgrinding, and chipping. I've found myself taking on a few jobs here and there and it only seems to be getting more and more, and I really don't want to take on anymore work without insurance. I charge "legit" prices for my work, and have no reason not to become a full fledged, legal, and insured business.

Because of what I do, I often use a chainsaw, whether it's to fell some small trees or to buck up a log that may be in my way, or just to take a stump down closer to the ground.

USAA told me that they don't insure small business' for what I'd like to do, due to the higher risk. They said I need to contact another insurance provider, and they estimated that insurance would likely cost me between 1k to 2k per year.

Who do you guys (that actually have insurance for your business) use for insurance, and what are your (rough estimate) costs? I understand you may not want to post that and that prices vary regionally, so no worries if you'd rather not say (you could always PM)

However, I'm interested in any thoughts you have regarding anything to do with insurance for this type of work. I've done a lot of research and a lot of thinking about starting a business over the last 2 years, this isn't just some random thought I had because some guy paid me a hundred bucks to mow an old field

I may have to drop certain services if the cost of insurance is prohibitive, such as any type of chain saw use. Perhaps I'll only be able to offer mowing, and not stump grinding or any other work.


I'm also interested in what your insurance company requires of you in operation. Such as what kind of safety equipment you must be wearing etc.

Any thoughts? Any recommendations on insurance companies, or coverages? I plan to meet with someone over the next month or so to 'officially' start my business, if all works out.

 

[Hiltz]

You are going to find out (if you don't already know) That insurance companys are leeches.

 

[Piston]

You are going to find out (if you don't already know) That insurance companys are leeches.

I already know that :laughing: However, that doesn't really help me....

I want to make sure that god for bid, if I'm mowing a field and I just happen to throw a rock at an oncoming car 100' from me, and it goes through the windshield and strikes the driver, that I'd be covered for damages. I can't just say, well officer, the reason I don't have insurance is because "insurance companies are leeches".

I know there are a lot of guys on here who do not carry insurance, but there has to be a few that are actually legit operations. (I've already got a couple PM's from guys who are, so I know it's true)

 

[oosik]

Many years ago I started a small business. Woodworking - music boxes, wooden toy cars, trucks,tractors, high end speciality exotic wooden boxes and chests and stuff like that. One day my jig slipped on the big joiner and I came that close to running my hand thru it. Being that it is 7.5 hp and howls like a banshee - I again was lucky. After some discussion with the wife it was decided that I should get insurance (see how smooth I slipped thru that). My insurance company for everything is State Farm. I went to them and after about 3/4 hour of explaining and them understanding the tools I use - everything under the sun EXCEPT a chain saw. They asked that I talk to some other company and that this risk was not the type/kind they wanted to take on. That kind of put the kibosh on the activities. I never went to any other insurance co. I still use all the woodworking tools except the joiner. My knees start knocking when I turn it on and it starts that howling. My business license expired years ago.
I'm just afraid that if you find an insurance co that will cover the activities they will be 1) very expensive and or 2) have more loopholes in the policy than a knitted afghan. State Farm simply did not want to have anything to do with the risks involved in my little business.

 

[RandyT]

I have my liability insurance through Country companies for my small engine repair business. I pay around $400 every six months for $1M of insurance. Premiums are based on gross sales so rates can vary.

 

[Cat_Driver]

My insurance is 20K a year. It's high because of the large amount of inventory and the building that cost me 50K is now worth 200K to replace. Includes vehicles, building, theft, liability and my drivers. Used it three times in 20 years, once I was broken into and tools stolen. Insurance company did what they do best and said, show us the receipts and we'll reimburse you. Knowing 99.9% of people don't have receipts I sorta saw a smile on his face. Well here's where my dear wife comes in with a complete excel spread sheet and attached receipts for every tool ever bought for the last 20 years. I think I almost saw the insurance agent cry a little. Total came to 26K, and they paid up. Next was a Dump trailer stolen, they paid 12K for that.

Last was a 60KW generator I bought 15 years earlier for 8K. It caught fire when I started it, I called them just on a lark to see if it was covered, they said it was and they paid for a new one almost 30K.

So I feel we're good with what I paid them and what they paid me back. Sure they will always come out ahead and I don't begrudge them that, but sure am glad they were there when I needed them.

Lesson - keep every scrap of paper and receipt some day you may just need them.

 

[Hiltz]

Yes your correct Piston I gave you absolutely no information, sorry. I too have re-looked into insurance in the past when I moved and purchased my second shop and started a small landscaping business. I was really shocked at the price increase . I have to agree with oosik who replied the cost is going to be prohibitive, too many loopholes , or you will be turned down all together. I think the days of the small operator are just about over. You have to be a big outfit , have a couple of crews, and do a a lot of business to keep up with expenses. The high cost of insurance being one of them. Good luck with your endeavor.

 

[DT86]

I think I mentioned this the other day but check with Erie about a landscapers policy. My quote was ~$800/ year to cover me alone operating, my equipment covered for replacement cost and $1 million liability. One had a $200 deductible the other had zero deductible ( the equipment / liability, that is) can't remember which was which.

 

[Piston]

Thanks guys for the replies. It's unfortunate that the cost of insurance is prohibitively high. I may end up doing something like DT86 and getting a landscaper policy that would only cover me when I'm mowing, and not using a chainsaw. Perhaps I won't be able to get insurance for the stump grinding, chipping, chain saw work, and storm cleanup, but I'll keep trying, I won't give up that easy :laughing:

I'll call Erie and check with them, thanks for the reminder! I'll be doing this as purely a side business but I don't want it to actually COST me money in the end, so I'll carefully consider the costs vs. what I get out of it.

I do believe that I'd be covered if doing work for free, so for instance, I wonder if a customer needed a tree taken down, and a field mowed, I could charge a little extra for mowing the field and cut the tree as a 'favor' and not part of the job... Although, I'm sure that's a little sketchy to begin with.

I was surprised to hear that my current insurance company doesn't even offer this kind of insurance.

DT,
What does your policy cover, is it only mowing? Or can you do other jobs?

 

[DT86]

DT,
What does your policy cover, is it only mowing? Or can you do other jobs?

From what I understand it covers the tractor, mower and basic landscape work, such as regrading a gravel drive. I did tell them I had no interest in cutting standing trees.

I only sat down once to get a basic quote. It looks like they are ahead since no one else will cover me doing the regrading work or call me back. I intend to go back tomorrow to see everything that can or more importantly can not be covered with their policy.

 

[breakpoint]

I think I mentioned this the other day but check with Erie about a landscapers policy. My quote was ~$800/ year to cover me alone operating, my equipment covered for replacement cost and $1 million liability. One had a $200 deductible the other had zero deductible ( the equipment / liability, that is) can't remember which was which.

Wow, I think this is very affordable. I'm actually planning to establish another source of income too and landscaping is a great idea to start with.

 

[JJZ 109]

I'm at about $825 per year for a liability policy that covers $300k per incident up to $1 million per year aggregate. The policy also covers $7,000 for one of my machines, $3300 for another and $17k for a third.

 

[Piston]

JJZ,

What "type" of business does your insurance fall under? Is it "landscaping" and are you covered for things like using a chainsaw? Seems like I mention that word and they all cringe

 

[Gale Hawkins]

I not sure everyone understands liability risks are hard for an insurance carrier to know how to underwrite and how fast a million dollar limit can be reached. When working on your own place risks are on the low side but put a tractor on a trailer to travel down a public road forces a carrier to be covering a lot of risk potential for example.

Sure many 'small' operators are not insured and never get bit by going the 'self insured' route. It works best when the operator has few assets himself but not so good for anyone he may cause damages.

My old equipment is insured as far as liability under a 'small' farm policy AS long as I do not charge any $$$. If one wishes to pay for my fuel then that is OK but I can not say or put out an ad stating I will bush hog for $5 per acre. I do provide some local services from time to time but it is always without charge. One guy had been sick for a few years and some places on his farm where just too much for his little red belly plus he was still not well. I cut over trees the size of my wrists to help him reclaim places where the hay people had backed away from the edge of the fields. I literally burned 10 gallons of $4 diesel in the process and he insisted before hand to pay for my fuel and did.

As noted there are specialty insurance carriers that most independent agents can hook you up with for the coverage you need.

One needs can change fast too. While typing this I realized I have not told our agent about the mini horses and horse trailer because he was specific that our rates were based on having NO horses on the place. Hope that does not bit us too hard.

 

[sparc]

I'll be doing this as purely a side business

That could be one thing that gives the Ins. Co. reason to cringe; that is they may take
your 'side business' as you not having the level of experience with this type of work
they are comfortable with so they look you as a higher risk, or apparently too high for
some of them.

If you can legitimately impress on them that you have x years doing this or in another
life you did this full time and have accumulated x number of years doing this type of
work without incident that may go a long way toward getting you favorable quotes.

I have been with USAA for over 35 years, they are great but this is outside their comfort zone.

 

[JJZ 109]

JJZ,

What "type" of business does your insurance fall under? Is it "landscaping" and are you covered for things like using a chainsaw? Seems like I mention that word and they all cringe

I own a seamless gutter business. They have it shown on the declarations page as, "Siding and Seamless Gutters". The equipment that they insure are a seamless gutter machine, an elbow machine and a towable 35' aerial lift. My 35' bucket truck is covered under a commercial vehicle policy, which I think runs in the $600 or so per year neighborhood.
I'm wondering if you're use of a chainsaw somehow lumps you into logging, which I would bet has high premiums?

 

[Tractor Seabee]

Liability insurance has become a problem for many small businesses. There are so many variables in assessing their risk. Time in business is a big factor. A new business w/o a track record is going to pay more and if you do not have your state's Labor and Industries medical/employee liability you will pay a lot more. Your personal auto policy and any extended liability on it or homeowners insurance does not cover your car/truck and you if it is used for business so that adds another increment.

I have a consulting business (one man) and had a terrible time getting or getting a decent rate on Errors and Omissions liability. Some companies said no, you have no record, others wanted as much as $10K/yr. Finally found a broker that set me up for $1K plus $600 for general business liability and $1K deductible. The carrier is Mid-Century Insurance. Lots of luck. Just keep looking.

Ron

 

[Gale Hawkins]

I think getting needed business insurance is going to become harder and harder. For people who use heavy and dangerous equipment it may get very hard. There are times when I would like to do some things for the public but other days not having coverage to do so is a plus.

Even when working for myself in the big truck, tractor or backhoe for a day takes about $60 just for fuel. It is at the point doing small custom jobs at the rates people expect to pay means one is actually loosing money when looking at the true costs. I seldom tear up equipment on my place but often it happens when working on someone's place. Today when you are digging you can create a liability very fast out in the middle of nowhere because it is amazing where you can find bury cable so making the call is a requirement even if you are going to dig a grave for a neighbor's dead horse.

As noted before if one has anything loosing it in a liability case is so real. My agent states I am covered as long has I am not charging for my services so I do not.

 

[whistlepig]

JJZ,

What "type" of business does your insurance fall under? Is it "landscaping" and are you covered for things like using a chainsaw? Seems like I mention that word and they all cringe

Commercial insurance. I had this. It doesn't care what you are doing or what you are doing it with. I was insured up to 1 million dollars for negligence. It wouldn't pay unless I was sued, taken to court, and lost. It doesn't insure for stupidity. If you accidentally drop a tree on someone's house or accidentally fling a hundred pound boulder through the pitcher winder on a 2 million dollar home while rotary mowing you are on your own. The nature of the beast. Costs of possible damages should be included in your operating cost.

 

[crashz]

That makes it impossible to price a job. If you have to account for any risk you are taking, pricing a job will go from reasonable rates to the highest imaginable dollar amount. What if my rotary cutter generates a weak magnetic field that shuts done a power grid or disrupts air traffic? The "what ifs" can be ridiculous.

Insurance needs to cover unexpected circumstances with the exception of criminal behavior. Stupidity happens and happens to the best of us.

I've been hunting down a carrier for a while now and out of 6 carriers, only one has called back with an actual price. The services I will have covered are:
- landscaping
- mowing
- grading
- light excavation (nothing over 4 ft deep)
- snow and ice removal
- landscape and site design (covers my professional engineer's license when doing work outside of my primary employer)

The only rate quoted is $1700 per year with three machines included.