Consulting Insurance

[Lignotuber]

Hey guys, I'm looking for advice on insurance for a new company. I'm planning on doing consulting work including risk assessments & appraisals (5% of time), small scale pruning (5% of time), and applications/treatments about 90% of the time. Based on my research and ASCA, I need general liability, as well as pollution liability, as well as professional liability which doesn't exclude personal injury and property damage. I've called countless brokers/agents over the last 3 weeks and most of them say they can't do it or just ghost you. I only received one quote for $6000 a year which seems unreasonable for a new part time business (about 5 days a month). If you have any advice or recommendations it would be appreciated.

Thanks

 

[Reach]

Starting a business like that on a 5 day per month does not sound like it will be financially viable, as the licensing and insurance alone for just pesticide applications gets expensive. We pay about $800/year for pesticide coverage alone, if I remember correctly. Professional liability is quite expensive, we looked into that and decided that we do not need it, as we do not sell consulting services directly, but I’m not real surprised at what you’re being quoted.

Most insurance companies will not touch a tree service, as we are specialty contractors, and high risk, so only specialty insurers will insure a tree service of any kind. A good agent that can help you will be hard to find, but they do exist.

 

[ATH]

I added professional liability insurance a couple of years ago...I think it was $500-$750 per year additional IIRC. My agent had trouble finding it. I think he found an add on to my previous policy that would have been north of $1000. Then he found another underwriter that included it in the policy (instead of an add on) for a few hundred less (total policy cost went up...but not as much as it would have gone up to add that extra). I am currently covered by Westbend.

Pesticide insurance adds about $750.

$6K is high, but not unreasonable. And I'm not in California - where I assume everything is more expensive.

 

[coffeefreak]

Just started a consulting firm, no treatments, no tree work, mostly inventories, planting plans and tree risk management for municipalities. It was very difficult to find someone to sell professional liability. Insurance companies do not want to insure one man startup operations. I contacted several of the people on the TCIA website who referred me to others who again referred me to others. I eventually found professional liability insurance for a reasonable price of around $1,000 per year. Then had to have general liability which was not as much. I am pretty sure the cost varies by state. Don't offer up that you are doing this part time, it will make it very difficult to find an insurer.

 

[Tom Dunlap]

Errors and omissions coverage seems pretty important

 

[Lignotuber]

Errors and omissions coverage seems pretty important

Yeah, from my understanding most errors and omissions/professional liability has an exclusion for personal injury and property damage. So you may not be covered by you GL or PL if you write a report and get in a lawsuit afterwards.

 

[Lignotuber]

Just started a consulting firm, no treatments, no tree work, mostly inventories, planting plans and tree risk management for municipalities. It was very difficult to find someone to sell professional liability. Insurance companies do not want to insure one man startup operations. I contacted several of the people on the TCIA website who referred me to others who again referred me to others. I eventually found professional liability insurance for a reasonable price of around $1,000 per year. Then had to have general liability which was not as much. I am pretty sure the cost varies by state. Don't offer up that you are doing this part time, it will make it very difficult to find an insurer.

Any chance I could get your broker's contact?

 

[Lignotuber]

I added professional liability insurance a couple of years ago...I think it was $500-$750 per year additional IIRC. My agent had trouble finding it. I think he found an add on to my previous policy that would have been north of $1000. Then he found another underwriter that included it in the policy (instead of an add on) for a few hundred less (total policy cost went up...but not as much as it would have gone up to add that extra). I am currently covered by Westbend.

Pesticide insurance adds about $750.

$6K is high, but not unreasonable. And I'm not in California - where I assume everything is more expensive.

Yeah, my friend is paying around $2500 from the same broker which is reasonable but I didn't want to bring it up and potentially impact his policy.. i even reached out to the insurer but they can't seem to find me another broker/agent that can help. I thought it would be easier to give people my money. If you could share your agent's contact I would appreciate it.

 

[Lignotuber]

Starting a business like that on a 5 day per month does not sound like it will be financially viable, as the licensing and insurance alone for just pesticide applications gets expensive. We pay about $800/year for pesticide coverage alone, if I remember correctly. Professional liability is quite expensive, we looked into that and decided that we do not need it, as we do not sell consulting services directly, but I’m not real surprised at what you’re being quoted.
Most insurance companies will not touch a tree service, as we are specialty contractors, and high risk, so only specialty insurers will insure a tree service of any kind. A good agent that can help you will be hard to find, but they do exist.

I should be able to pull $1000 plus per day so it would still be worth it. Just more than I'd like to put in to start and can't figure out why it's twice as much as what others with the same coverage are paying.

 

[Reach]

I should be able to pull $1000 plus per day so it would still be worth it. Just more than I'd like to put in to start and can't figure out why it's twice as much as what others with the same coverage are paying.

Part of the price difference is probably your lack of insurance history - a new policyholder is consider high risk, and thus high price. Also, you’re in California, where there are probably more lawsuits filed and won than in all the rest of the states combined.

Around here, just for your reference, a top end consulting arborist that we use bills $100/hour, and he’s one of the best in the business.

 

[Lignotuber]

Part of the price difference is probably your lack of insurance history - a new policyholder is consider high risk, and thus high price. Also, you’re in California, where there are probably more lawsuits filed and won than in all the rest of the states combined.

Around here, just for your reference, a top end consulting arborist that we use bills $100/hour, and he’s one of the best in the business.

My friends business is new as well but yeah California is the capital of lawsuits.. For consulting work $100-$175 is pretty standard here, more for legal stuff. I just want to get at least one more quote before I make a decision. Might not be worth offering reports for the first year.

 

[ATH]

My friends business is new as well but yeah California is the capital of lawsuits.. For consulting work $100-$175 is pretty standard here, more for legal stuff. I just want to get at least one more quote before I make a decision. Might not be worth offering reports for the first year.

Just be aware of what kind of reports you are offering. I got coverage when I started doing Tree Risk Assessments. However, liability for many practices would be very low and I'd feel comfortable doing without E&O policy. For example: planting plans, species selection, health (not risk!) assessments and diagnostics, soil management, inventory reports, canopy cover, helping catalogue tree benefits, etc... Not that there is NO liability, but all quite a bit different than writing a risk assessment report where you identify the tree as low risk, but missed something that leads to failure next week. Also, following published industry standards is the cheapest insurance you can buy. It would be tough to loose a lawsuit where you can show that you followed ANSI to a "t"

 

[Lignotuber]

Just be aware of what kind of reports you are offering. I got coverage when I started doing Tree Risk Assessments. However, liability for many practices would be very low and I'd feel comfortable doing without E&O policy. For example: planting plans, species selection, health (not risk!) assessments and diagnostics, soil management, inventory reports, canopy cover, helping catalogue tree benefits, etc... Not that there is NO liability, but all quite a bit different than writing a risk assessment report where you identify the tree as low risk, but missed something that leads to failure next week. Also, following published industry standards is the cheapest insurance you can buy. It would be tough to loose a lawsuit where you can show that you followed ANSI to a "t"

That's kind of how I feel about it as well, you figure with 2-3 pages of assumptions & limitations as well as following ANSI to a T I'd be fine. I just like doing things right and hear of cases that are cheaper to just settle. I've written hundreds of risk assessment reports but don't plan on it being a big part of my business. Just want to cover my butt just in case.