About General Liability Insurance
All businesses, regardless of industry, face risks that should be covered by insurance. The most common and comprehensive type of policy business owners invest in is general liability insurance (or CGL).
Some of the risks CGL insurance covers are:
- Bodily injury
- Property damage
- Medical payments
- Legal defense and judgment
- Personal and advertising injury
While businesses aren’t legally required to carry general liability insurance, operating without it is extremely risky. If your business is sued, you could end up facing fees totaling hundreds of thousands of dollars (or more). Having a sufficient CGL policy in place to help compensate for these damages is the only way to prevent this type of event from devastating your business.
COMMON SITUATIONS THAT GENERAL LIABILITY INSURANCE WOULD COVER FOR A TREE SERVICE BUSINESS
Example 1: A tree accidentally falls into the property owner’s window while your team is trying to remove it. Their glass is not only broken, but the window frame is also damaged from the branches. General liability insurance would most likely cover the cost of fixing the window and any surrounding damage.
Example 2: You take down a tree for a customer and remove the stump. After filling the hole, the customer claims that you damaged the roots to their other tree, causing them to die. General liability insurance would most likely take care of the ensuing costs.
Of course, this is not an exhaustive list of perils a general liability insurance policy will cover, and some conditions may result in a particular peril not being covered. It’s always best to talk to your agent in-depth about the specifics of your policy to avoid blind spots in coverage.
COST OF GENERAL LIABILITY INSURANCE
The average tree service business in America spends between $400-$1,500 per year for $1 million in general liability coverage.
Check out the chart below for a snapshot of average CGL expenditure across a variety of industries:
Several factors will determine the price of your policy. These include your:
- Number of employees
- Per-occurrence limit
- General aggregate limit
You may be able to acquire general liability insurance at a discounted rate by purchasing it as part of a business owner’s policy (BOP) rather than as a standalone policy. A BOP is a more comprehensive solution that includes multiple forms of coverage, such as business interruption and property insurance.
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OTHER TYPES OF COVERAGE TREE SERVICE BUSINESSES NEED
While general liability is the most important type of insurance to have, there are several other forms of coverage you should be aware of. Below are some other types of insurance all tree service businesses should obtain:
Commercial Auto Insurance
Tree services rely on their vehicles to haul equipment and get from one property to the next. A personal auto insurance policy will not cover potential damages to the vehicle — even if the driver is technically off-duty at the time of the crash.
Commercial auto insurance covers both the vehicle and any other property damage in the event of an accident.
Commercial Property Insurance
If your tree service business owns its own office or warehouse space, then you’ll need commercial property insurance to cover both the physical structure and the property inside of it.
If your business keeps expensive equipment inside the property or sells specialized tools to its customers, then commercial property insurance will most likely pay to repair the building and replace the tools in the event of certain covered events like a fire or severe storm.
Professional Liability Insurance
Professional liability insurance is there for business owners in case their work causes any type of damage to the physical structure or surrounding grounds. This coverage extends to errors or omissions made by your employees. So if someone accidentally cuts down the wrong tree, you will most likely be covered.
TYPES OF COVERAGE SOME TREE SERVICE BUSINESSES MAY NEED
In addition to the policies outlined above, there are a few other types of coverage your tree service business may require depending on certain aspects of your operations. Some of these might not apply to you, so be sure to ask your agent which policies are right for your business.
Commercial Umbrella Insurance
Whether it’s a lawsuit from a competing tree service company or a medical claim brought on by pesticide use, commercial umbrella insurance can cover a wide array of potential costs should they exceed the limits of your primary general liability insurance policy.
Product Liability Insurance
If your business sells products to its customers, such as pruners or hedge clippers, then you’ll need product liability insurance. Even if your business didn’t actually make the products, you can be held liable for any damage they caused simply because you sold them.
ADDITIONAL STEPS TO PROTECT YOUR BUSINESS
Although it’s easy (and essential) to invest in business insurance, it should not be your frontline defense. Yes, insurance will compensate for your business’ financial losses after an incident occurs, but it’s much better to avoid losses altogether.
With this in mind, here are three things you can do to better protect your business:
- Use legally robust contracts and other business documents. (We offer free templates for some of the most common legal forms.)
- Set up a limited liability company (LLC) to protect your personal assets. (Refer to our guide for step-by-step instructions on how to form an LLC in your state.)
- Streamline your business’ internal processes. This will remove unnecessary variables from common tasks and create a safe, consistent environment for conducting business.
FREQUENTLY ASKED QUESTIONS
What is included in a business owner’s policy?
A typical business owner’s policy includes general liability, business interruption, and property insurance. However, BOPs are often customizable, so your agent may recommend adding professional liability, commercial auto, or other types of coverage to your package depending on your company’s needs.
What is the difference between business insurance and general liability insurance?
“Business insurance” is a generic term used to describe many different types of coverage a business may need. General liability insurance, on the other hand, is a specific type of coverage that business owners need to protect their assets.
Do I need insurance before I start a business?
You should invest in coverage for your business before your first interaction with a customer. Although the cost of insurance may seem high for a brand new business, it’s best to be proactive when it comes to protecting your assets. After all, you can’t buy insurance to cover a loss that has already occurred.
Will insurance protect my business from everything?
Not necessarily. Certain exceptions may be written directly into your policy, and some perils may be entirely uninsurable. Be sure to discuss the scope of your policy in-depth with your agent to avoid being blindsided by holes in your coverage.