Tree service insurance

Perhaps more than any other industry, the tree care business is fraught with risk, making insuring your firm against losses, litigation and liability difficult. There are steps you can take, however, to make insurance coverage less expensive and more readily available.

Challenges

Occupational Safety and Health Agency (OSHA) statistics indicate that tree care workers are all too susceptible to on-the-job injury or death. The agency says that 288 fatalities occurred between 2003 and 2006 during tree trimming and removal operations. Numbers such as those make workers’ compensation insurance a costly line item.

A general lack of understanding of the tree care field compounds the problem. Industry conditions that often fail to distinguish between firms with professional, well-trained staff led by certified arborists and companies built on little more than chain saws and trucks cast an ominous shadow on everyone associated with the field. In other instances, regulations are inappropriately applied, lumping tree care businesses with logging operations or general construction firms.

Tailoring coverage to the industry

Clarifying those misconceptions can aid in leveling the playing field when shopping for insurance. Mark Shipp, president of California’s Ogilvy-Hill Insurance Company (www.ogilvyhill.com), is a longtime friend of the tree care industry. A former board member of the Tree Care Industry Association, he has worked in the insurance field since 1990. Early on, Shipp identified some of the unique qualities and challenges of tree service companies.

“I found the tree care industry [to be in need of specialized services], and have been focusing on it for 15 years,” he says.

Early in his career, Shipp spoke with a tree services company about its struggles in obtaining quality coverage at reasonable rates. Although the company had instituted policies to reduce its likelihood of filing claims, the insurance world continued to make protection a precious commodity. Shipp recognized that the nature of the business made it unattractive to insurers; however, he didn’t believe that was necessarily justified. He negotiated with an insurer on behalf of the company, detailing the measures undertaken to minimize liability. Successful in obtaining priority product pricing for his first tree care client, Shipp took an interest in serving the field.

“I began to focus on helping clients decrease their risk,” he says.

Reducing the risk

More than 120 years old, Ogilvy-Hill offers a variety of coverage to tree care companies, as well as other industries. In addition to workers’ compensation and general liability, the company provides equipment coverage and employment practices liability.

“We’ve seen an increase in lawsuits over wage and hour issues,” Shipp says, citing one risk in the area of employment practices.

Another troublesome area is workers’ compensation coverage, which Shipp says is one of the largest expenses for a tree care company, partly because very few insurers are willing to write coverage for the industry.

Shipp’s approach is a specialized, comprehensive program to assist companies in becoming more appealing as insurance customers. Ogilvy-Hill’s Risk Reduction Approach helps clients evaluate their companies and design methods through which they can operate more profitably and with a minimized likelihood of loss over the long haul.

Ogilvy-Hill puts its human resources division to work on behalf of clients, training and advising them on hiring, terminating and everything in between. Unlimited consultation services focusing on preparation of applications and training manuals are available.

Shipp’s team also focuses on safety programs, developing comprehensive efforts to curtail injuries, including tailgate safety talks, climber training and CPR instruction.

“When that profile is changed, it reduces long-term costs,” Shipp says. “We make them more attractive to insurers and reduce costs over time.”

Training, along with other safety education efforts, can be the way to better partnerships between tree care businesses and insurers. Shipp helped one company save more than $200,000 a year in workers’ compensation coverage rates by demonstrating to a private insurer the company’s commitment to preventing accidents, including employee certification programs and a full-time staff safety officer. He secured a policy at a greatly reduced cost over the state-run program used previously.

Shipp has identified that specialty products address unique needs. For example, ArborMax insures arborists against liability claims arising from consultation services. Ogilvy-Hill is California’s exclusive representative; the product is available through other companies in most states.

To locate an insurance agency in your area, Shipp recommends seeking representatives who are interested in more than simply selling policies. Agents should be familiar with the tree services industry and be knowledgeable about overall programs, beyond traditional insurance, that aid companies in building and strengthening their businesses.

“Your insurance representative should be a trusted advisor,” Shipp adds.

…if a hefty portion of your work results fromhurricane damage, you can protect your businessfrom work loss during storm-free years.

Noninsurance protection products

The best insurance coverage cannot protect you against every risk. One of the variables that may affect tree care firms significantly is the weather.

If weather conditions are key to your profitability, a weather derivative contract may be worth considering. For instance, if a hefty portion of your work results from hurricane damage, you can protect your business from work loss during storm-free years. The arrangement will compensate you in a predetermined amount if there are no hurricanes during a covered period.

Jeff Hamlin, business development director at San Francisco-based WeatherBill (www.weatherbill.com), says his product has been popular with the landscaping and agriculture industries.

“If there is a weather event that you worry about, we can take the financial risk away and pay you if it happens,” he says. Unlike insurance products, there is no damage assessment; the agreed upon sum is paid based upon the weather conditions, regardless of their effect on a business.

WeatherBill studies historical weather data to determine its risk in each contract. Pricing is based upon the likelihood of the undesirable weather occurring. Contracts can be purchased as late as four days prior to the time period being protected, but for contracts issued 21 days or less in advance, current forecasts are evaluated. Thus, a short lead time will mean that pricing will be adjusted day by day, and will likely be more expensive. The coverage time period can be as long as several months, but Hamlin says most clients focus on crucial points when cash flow is most important. WeatherBill is available to purchase online, and its Web site includes a user-friendly cost calculator.

Based in Greensboro, N.C., the author writes articles about horticulture, landscaping, agriculture and travel. She has been a contributor to Moose River Media publications for three years.