Liability Insurance for One Man/Part Time Tree Work?

S

Spiercev

Location
Hickman
Hello all, I’m new to this forum. I’ve been reading over a lot of these threads and found them very useful!

So, something I would like input on is Insurance options for someone doing tree work, that is done on a part time basis. I work full time and a half already, but I have done several tree removals for a landscaping business over the last couple years. But I’ve been starting to get a steady amount of small tree jobs here and there that people want me to do; removing limbs around houses, dead tree removals, taking trees out close to stuff, ect... I’m wanting to figure out what other people do for liability, for something that is usually just me working, sometimes a ground guy, and maybe a couple jobs a month right now. I feel confident in doing jobs that I do, do anything risky that I’m worried about but I want make sure I would be doing things the right way, and know what y’all think and what people have worked out before for similar situations.

And would a sole proprietorship or some other type of business type be required to use any type of insurance ?


I love doing tree work and have most of the gear that I would need to do most jobs since I’ve been working for other people, but want to be able to bid jobs and do stuff myself more often.

Thanks for any input.

-Pierce


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How much do you expect to gross from this business? Many if not most liability insurance companies base on gross sales. Being part time can be beneficial in keeping the premium low. I work full time for a large municipal government that regulates tree services by specific license as well as a business license. Since i am responsible for administering the license requirement i must toe the line with my side work. I usually gross 8-10K per year and my liability insurance runs me just over 1K per year. Be sure that your agent or underwriter understands exactly what type of work you are doing, as many will write your policy as landscaping which is an entirely different animal.
 
oldoakman said:
How much do you expect to gross from this business? Many if not most liability insurance companies base on gross sales. Being part time can be beneficial in keeping the premium low. I work full time for a large municipal government that regulates tree services by specific license as well as a business license. Since i am responsible for administering the license requirement i must toe the line with my side work. I usually gross 8-10K per year and my liability insurance runs me just over 1K per year. Be sure that your agent or underwriter understands exactly what type of work you are doing, as many will write your policy as landscaping which is an entirely different animal.
Click to expand...

Okay, great info- thanks! I think the gross income may vary widely depending on what type of jobs I get into, but I may try to target 10k-15k initially just as an easy number to hit with jobs spread apart a little as I have time.

So it sounds like I would need to set up a business anyways, such as a “sole proprietor” (?unless any one has input on a different/better initial way to set it up, maybe or maybe not an LLC?) and then I would contact an insurance company after all that specifically for “tree work” liability INS. And from what you are saying, they should base my coverage cost on estimated gross revenue, so I should still be operating with that at a reasonable margin I would think.


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Pretty much covers it. You most likely will also need a local business license. Those laws vary widely from place to place. Your municipality or county revenue departments will direct you with that task.
 
3 people you need input from:
1) attorney
2) accountant
3) insurance agent

Pick one and ask for referrals to the others "who do you play well with?"

1 person you do NOT need input from:
some random dude on the innerwebs

(at least that is what some random dude online told me once!)

now for some random dude comments that I suggest you mostly ignore and talk to the 3 above:

I think an LLC makes a lot of sense. It provides some protection of your personal assets and is pretty simple to set up. Your federal taxes will still be "as simple" as a sole proprietor. Set up an LLC first. Then get a TIN EIN for that LLC, then use that TIN EIN to open a bank account in the LLC's name. EVERY dime you get from tree care work goes into that account. you can pay yourself out of it, but don't buy personal use items directly with that money. Pay yourself to another account then use that account to buy personal items. use that LLC account to buy stuff for the business.

You'll also need worker's comp if you hire anybody - even part time.
 
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ATH said:
3 people you need input from:
1) attorney
2) accountant
3) insurance agent

Pick one and ask for referrals to the others "who do you play well with?"

1 person you do NOT need input from:
some random dude on the innerwebs

(at least that is what some random dude online told me once!)

now for some random dude comments that I suggest you mostly ignore and talk to the 3 above:

I think an LLC makes a lot of sense. It provides some protection of your personal assets and is pretty simple to set up. Your federal taxes will still be "as simple" as a sole proprietor. Set up an LLC first. Then get a TIN for that LLC, then use that TIN to open a bank account in the LLC's name. EVERY dime you get from tree care work goes into that account. you can pay yourself out of it, but don't buy personal use items directly with that money. Pay yourself to another account then use that account to buy personal items. use that LLC account to buy stuff for the business.

You'll also need worker's comp if you hire anybody - even part time.
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As a business owner of 15+ years, I will second what @ATH just wrote. Talk to the professionals, and do what they say - you may be able to use an accountant to set up your LLC and TIN, but you should still make friends with a good small business lawyer (not a “I do wills and criminal law and chase ambulances” kind of lawyer, but a lawyer who specializes in small business law).

Finding an insurance agent may be a challenge. Not all of them can/will insure a tree service, but there are plenty who will.

And yes, worker’s comp. is legally required if you have anyone work for you, no matter how part time they are. If they get hurt and you don’t have coverage for them, you’ve just declared bankruptcy.
 
If your just starting out try a dba? If you don't have any employees, liability insurance should be fairly low at least it was when I was starting out. Who knows. it does vary from state to state.
 
ATH said:
Set up an LLC first. Then get a TIN for that LLC, then use that TIN to open a bank account in the LLC's name. EVERY dime you get from tree care work goes into that account.
Click to expand...
This is a small detail, but after establishing an LLC I was given a EIN not a TIN, aside from that all the same as described.
 
ATH said:
Yes...my bad. "Employer identification number". Not "taxpayer identification number".

Just more evidence that you should be talking to an attorney and accountant not somebody on the internet.
Click to expand...
If we are getting technical, an EIN, is a TIN, but a TIN is not an EIN. An SSN also is a TIN when used for tax purposes. Just to add a little more confusion to the mix.
 
Thank you all for the helpful replies! All makes sense- I’ll be talking to a accountant for starters and see what I can get going. Thanks again!


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Do not be enticed to get cheaper insurance. Every year, as part of my renewal, I’m vetted for my gross receipts, type of work, and liability limit. It takes $4M coverage to bid on municipal contracts in my work area so that helped me pick the boundary.

Do not play the games of getting cheaper (30-70%) cheaper landscaper insurance. The dividends pay $0 in that club.

First year you’re an unknown commodity so you’ll pay a larger premium. After 11 years, my broker comments, “How do I make any money off you?”
Because Im a) fortunate to be lucky, b) hang around and listen to good counsel, c) don’t do stupid stuff. This year I bought him lunch and handed my check to him for the same amount as I did then.

I did DBA for a while until one of my clients, an attorney, threw me those eyes. Time to pay more attention business safety. We swapped service costs and I went LLC. Not insurance but in an Event could leave me and importantly, my family homeless.
 
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