2014

Need-to-Know Insurance Policies for Logging and Lumbering Small Businesses

Most small-business owners don't have time to sift through each insurance plan and figure out what they need and how they can save money on their business insurance. To help you understand your risks, liabilities, and the cost of business insurance, we've compiled this list of need-to-know business insurance policies for small logging and lumbering businesses.

General Liability Insurance for Lumber Mills, Lumber Liquidators, Loggers, and Forestry Professionals

General Liability Insurance pays for lawsuits filed against your lumber business by third parties who allege your business…

  • Damaged their property.
  • Injured them.
  • Caused advertising injury.
  • Infringed on a copyright.
  • Committed libel or slander.

Third parties include anyone not employed by your business, which includes vendors, customers, contractors, subcontractors, and deliverymen.

Here's a case study of how this might work. A logs-to-lumber business comes to a client's property. They set up their portable sawmill operation, but in the process of working and trekking back and forth, they tear up the client's field.

In a situation like this, a client can sue your logging company. But if they do, General Liability Insurance can pay for the cost of the lawsuit, including…

  • Your legal defense (lawyer and paralegal bills).
  • Court expenses for evidence, witnesses, etc.
  • Judgments that award damages to the client / third party.
  • Settlements to prevent the case from going to court.

General Liability Insurance can help your business avoid the costs of many expensive lawsuits, which can easily run in the five- or six figure range.

Property Insurance for Lumber Mills and Logs-to-Lumber Businesses

Property Insurance reimburses your business for its property that is lost or damaged by…

  • Fires.
  • Theft.
  • Vandals.
  • Certain weather events.

Property Insurance covers a wide range of your commercial property, including…

  • Lumber saws.
  • Lumber mills.
  • Log splitters.
  • Power tools and other equipment.
  • Supplies.
  • Inventory.
  • Land, buildings, and office space.

Property Insurance covers the value of your property, which means you have options on how to evaluate your property when you insure it.

Cash-value policies reimburse your business for the current value of your property, which can be a problem if that property has depreciated. In other words, your log splitter may have cost you $3,000 when you purchased it five years ago, but, it may only be worth $1,000. Cash-value policies will only pay your business for your property's current depreciated value.

Replacement value policies pay your business for the value of your property as if it were new. Your log splitter would be insured for the $3,000 it would take to replace it. These policies naturally cost more, but can off more coverage as well.

If your logging business is based out of your home, your personal Homeowner's Insurance may not offer you the coverage a commercial Property Insurance policy can. Many Homeowner's Policies do not cover commercial property kept under your roof.

If someone breaks into your garage and steals your business tools and equipment, your Homeowner's Policy may not offer reimbursement. A commercial Property Insurance plan can reimburse your business for the stolen items, often sending you a check in as little as a few days.

Property Insurance can include Business Interruption Coverage, which helps your business when its offices are destroyed or made uninhabitable by a fire or other covered Property Insurance claim.

BIC can pay your business the income it loses if you have to temporarily suspend your operations (because of a covered property claim). If your offices are destroyed or severely damaged, BIC can also pay for your business to relocate.

Business Owner's Policies for Lumber and Logging Companies

Business Owner's Policies (BOPs) provide insurance at lower premiums for many qualifying lumber and logging companies.

BOPs are actually just an insurance package that includes two of your most basic (and important) insurance policies…

  • General Liability Insurance.
  • Property Insurance.

Business Owner's Policies are only available to qualifying small businesses. In order for your business to get this insurance discount, it needs to meet a few "lower-risk" requirements. Insurance companies may sell this to your business if it…

  • Doesn't need more than a year's worth of Business Interruption Coverage with its Property Insurance.
  • Doesn't work in a high-risk industry.
  • Doesn't have large-scale property or premises to insure.

Many of insureon's clients qualify for BOPs, so contact an agent today. We'll check to see if you qualify and send you a free quote on this and other insurance policies.

Cyber Liability Insurance for Logging and Lumbering Companies

Cyber Liability Insurance (also called Cyber Risk Insurance or Data Breach Insurance) helps a forestry business respond to cyber attacks.

Hackers may try to break into your computers and networks in order to steal money or certain types of data. Hackers are often looking for Social Security numbers, credit card information, or other data you might store for your customers and employees that will allow hackers to access bank accounts or credit cards.

After an attack, your business may be legally obligated to inform anyone whose data may have been stolen. The law makes sense, but it also means you'll damage a lot of relationships with your clients.

Cyber Risk Insurance pays for…

  • Fraud monitoring for clients and other people whose data may have been stolen after an attack.
  • The cost of contacting your clients after an attack.
  • P.R. and advertising expenses to rebuild your business's reputation.
  • Reimbursements when hackers try to extort money from your business.
  • The cost to investigate the attack, who did it, and how you can shore up your network to prevent another attack.

If a hacker targets your business, Cyber Risk Insurance can help your business recover the damage it does to your financials, reputation, and other aspects of your business.

Errors and Omissions Coverage for Lumber Mills, Lumber Liquidators, Loggers, and Forestry Professionals

Errors & Omissions Insurance (also called E&O Insurance or Professional Liability Insurance) pays for lawsuits against lumber mills, loggers and other businesses when their clients are dissatisfied with the quality of their work.

Professional Liability Insurance can pay for lawsuits when clients allege your business…

  • Didn't deliver the goods and services it said it would.
  • Made errors or poor judgments.
  • Delivered partial or unsatisfactory work.
  • Was professionally negligent.

For your business, this could cover a lawsuit when a client claims your business failed to deliver the lumber it promised. If you provide an estimate on a logs-to-lumber project, but fail to reach the estimated lumber, your client could sue you, alleging you made errors (in either your estimate or execution of the work).

A client's lawsuit might be totally frivolous, but one thing would be real: the cost. Lawsuits like this can cost your business tens of thousands of dollars, if not more. Regardless of a lawsuit's merit, your Professional Liability Insurance can cover you, preventing one miscommunication, small error, or upset customer from ruining your business.

Workers' Compensation Insurance for Lumber Mills and Logs-to-Lumber Businesses

Workers' Compensation Insurance (commonly called Workers' Comp or Workman's Comp) protects your logging company from the extraordinary expenses of a workplace injury or illness.

With its inventory of lumber saws and log splitters, your business works with lot of heavy-duty equipment. Whether for a serious injury (like a severed hand) or something more common (like a herniated disc), your business could be legally obligated to pay for all sorts of medical and related costs when a worker is injured on the job.

Workers' Comp can pay for…

  • Medical bills.
  • Legal expenses.
  • Settlements to keep your employee from suing your business.
  • Judgments paying damages (like pain and suffering, disability, lost earning potential, etc.).
  • Funeral costs and income payments to the families of a deceased worker.

Many states require your business to have this coverage, so make sure to meet your legal requirements. Contact an agent today and get a free quote.

Insureon's Custom-Built Small Business Insurance for Logging and Lumbering Companies

Insureon has covered more than 30,000 small businesses. One of the reasons we've been so successful is that we custom build each insurance plan to fit the needs of each business.

Your agent will be trained in the lumber industry's insurance needs. They build a custom insurance quote to meet your liabilities and state requirements while also cutting out unnecessary coverages. You'll get the insurance you ask for, nothing more and nothing less.

Submit our online application, and get a free quote today.

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