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Question DetailsAsked on 5/6/2013

What kind of insurance should Tree Service contractors carry?

Also, is licensing or bonding necessary?

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1 Answer

Voted Best Answer

General liability and worker's compensation/injury are good ones to have. Realize that these insurances are very expensive so expect to pay more to a contractor who carries them. Tree services, window cleaning, roofing, etc. where someone is working with dangerous equipment and/or at a height where falling can produce a serious injury or death cost the most. Call your homeowner's insurance agent and ask them about your own coverages. If you have sufficient coverage on your end you might save a little money going with a contractor who has dropped those costs but it can be at a risk to you. If he has employees and one gets hurt they might file a claim against your insurance but should automatically be covered under his insurance so it likely won't be approved. If they are sub-contractors they can file a claim against his insurance and yours in most cases. Many small companies have moved away from employees in favor of sub-contractor agreements with the people who work for them. The employment taxes and new health care bill make it too expensive to have employees without charging a lot more to the customers for that labor. Then there's the added cost to the employer of filing and managing all of the extra paperwork for each employee. For a small business it just isn't worth it anymore to classify someone as an employee. For that reason you should make sure you have sufficient coverage independently of any carried by a contractor you hire.

Todd Shell

Todd's Home Services

San Antonio, TX

Answered 7 years ago by Todd's Home Services


Three points Todd made which may have slipped by you unnoticed:

1) if your contractor uses a subcontractor, you need to be sure the SUBCONTRACTOR also has all the same insurances, otherwise you have an uninsured worker on your property.

2) Another thing you should look for, and is required of contractors in most organized towns and cities, is bonding, where he has to post a bond with a bonding company. This is not "insurance" as such but works in a similar manner, and allows you to make a claim against this bond for any failure on his part to complete the job or do a workmanlike job.

3) In most cases your homeowners or renters insurance will NOT protect you against a contractor's employee injuries, and even if it does any claim will result in a substantial premium increase later on. That is generally specifically exempted, and you have to get a separate rider to cover that.

4) Ditto with Workman's Compensation, which your policy can provide only if you are directly hiring the people as the employer - which you do NOT want to do, because then they are your employees, you are fully responsible for their actions, and you are responsible to government agencies for payment of their withholding, social security, state unemplyment and disability taxes, etc.

Answered 7 years ago by LCD

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