How Much Does Lawn Care Business Insurance Cost

Lawn care businesses maintain properties with services like mowing, fertilizing, and pest control.

They may also offer snow removal and other services.

General liability insurance, averaging $45/month, is essential.

Additional coverage like workers’ comp or commercial auto policy raises costs.

Landscaping companies focus on design and may offer lawn care, with varying insurance costs based on services and risks.

Lawn Care Business Insurance
Lawn Care Business Insurance: Photo source (Forbes)

Factors in Calculating Lawn Care Business Insurance Costs

Every lawn care business is unique, and these differences affect the insurance expenses.

While factors like location are fixed, the coverage amount can be adjusted to align with the business’ needs and budget.

Coverage Type

Lawn care businesses have various insurance options, with general liability being essential for property damage or injuries.

Additional coverage like workers’ comp, tools, and commercial auto insurance can be tailored based on business needs.

Rates depend on services, employees, and equipment, increasing as coverage expands.

Small businesses generally pay lower premiums, while larger, more established ones with extensive equipment and employees might pay higher premiums due to broader coverage needs.

Coverage Amount

The coverage limit is the maximum amount an insurance company pays on a claim, set per incident or per year.

Higher limits mean higher premiums.

Different types of insurance (like general liability or commercial auto) have varying limits.

Business owners should carefully consider these limits to balance coverage needs and budget.

Types of Lawn Care Services Provided

Insurance prices depend on perceived risk, with businesses likely to file claims paying more.

Services offered affect risk; winter services like snow removal can increase costs due to higher accident risk.

Specialized services involving chemicals might also lead to higher premiums.

Geographic Location

Insurance rates are influenced by a business’s location and associated risks.

Higher-risk areas, with factors like crime rates or natural disasters, lead to increased insurance costs.

For lawn care businesses, locations prone to theft or natural disasters result in higher premiums.

Claims History

A lawn care business’s past insurance claims can raise its premiums.

Companies with claims history are seen as higher risk.

Even one claim can lead insurers to consider the owner as negligent, affecting insurance costs.

Similar businesses can pay different rates based on their claims history.

Number of Employees

Expanding a lawn care business with more employees can raise insurance costs, especially for workers’ compensation coverage.

State laws often mandate coverage even with just one employee, increasing needs as staff grows.

Insurance companies view businesses with more employees as higher liability risks, leading to higher costs, unlike sole proprietors with fewer variables to consider.

Actual Cash Value vs. Replacement Cost Coverage

Lawn care businesses can choose between two insurance payout methods: actual cash value (cheaper, considering item depreciation) and replacement cost coverage (more expensive, pays to replace items at today’s prices).

Despite the higher cost, replacement coverage means higher payouts as depreciation isn’t factored, reducing out-of-pocket expenses for equipment replacement.

Types of Lawn Care Business Insurance

New lawn care business owners should prioritize getting business insurance before promoting their services.

They need to assess their specific needs, focusing on two main categories: liability coverage (protects against injury or property damage claims) and property coverage (insures business possessions like equipment and vehicles).

General Liability Insurance

General liability insurance is crucial for lawn care businesses, shielding them from financial repercussions due to injuries, property damage, or lawsuits.

It covers medical bills if a client is injured on the property, repairs for property damage caused by the business, and legal defense costs in case of lawsuits.

Workers’ Compensation Insurance

Workers’ compensation insurance helps cover the cost of medical bills and lost wages if an employee is injured on the job.

For example, if an employee is unloading a large commercial lawn mower from a trailer and the mower rolls down the ramp and breaks their foot, the employee may be unable to work for several weeks and will also have medical costs associated with the broken foot.

The lawn care company’s workers’ compensation insurance helps pay for the worker’s medical bills as well as any lost wages.

The cost of workers’ compensation insurance is typically tied to the payroll for the company.

Companies with higher payrolls tend to pay higher insurance rates for coverage since they often have more employees.

State laws may require this type of coverage for any lawn care business with one or more employees.

In addition, some states may require small businesses to obtain higher amounts of workers’ compensation coverage than others.

Tools and Equipment Insurance

Lawn care equipment, such as mowers, leaf blowers, and string trimmers, can be costly to replace, especially for a business that’s just getting off the ground.

A new business owner may not factor in unexpected expenses such as stolen or damaged equipment when estimating their lawn care business start-up costs.

Tools and equipment coverage can help lawn care businesses protect their essential assets in the event of a covered loss.

One of the benefits of tools and equipment coverage is that it protects property in a wide variety of situations.

For lawn care companies that often move their equipment between jobsites, this coverage can protect against damage or theft whether tools and equipment are at a client’s home or stored in a storage facility.

The price of equipment coverage often depends on the coverage limit selected and whether the business chooses actual cash value or replacement cost coverage (when available).

Commercial Property Insurance

Lawn care businesses that own or rent real estate, such as a physical office space, may want to consider commercial property insurance.

Commercial property insurance coverage protects a business’s property from covered losses at the place of business.

Covered property can include computers, furniture, and lawn care tools and equipment stored on-site.

If a fire destroys the lawn care business’s office furniture, for example, a commercial property policy may help cover the cost of replacing it.

Commercial property insurance isn’t necessary in all situations, though.

Businesses that don’t own or rent a commercial space will likely benefit more from purchasing tools and equipment coverage instead.

For example, a business owner who stores lawn care equipment in a locked trailer at their home will not need commercial property coverage, as tools and equipment coverage will protect their equipment in that scenario.

Commercial Auto Insurance

Since lawn care companies often have their own vehicles to move employees and equipment to jobsites, those vehicles may need to be insured with commercial auto insurance.

Commercial auto insurance offers a range of policy options, including liability coverage, collision coverage, and comprehensive coverage, and coverage is based on the policyholder’s needs and budget.

Lawn care businesses may be required by law to purchase commercial insurance for any vehicles that are used in support of the business.

The cost of commercial auto insurance often takes into account the age and value of the vehicle, coverage options, and the personal driving record, claims history, and age of any driver who will be using the vehicle.

Business Owner’s Policy (BOP)

Owners of lawn care businesses may be able save on their total insurance costs by purchasing a business owner’s policy (BOP).

A BOP is a type of commercial insurance policy that combines general liability insurance with commercial property coverage.

Many BOPs also include business interruption insurance, which helps cover the company’s recurring costs—such as payroll—if a covered loss forces the business to close temporarily.

A BOP can be a worthwhile purchase for many small-business owners, and some insurance companies give business owners the option to completely customize their policy with additional coverage options and expanded coverage limits.

Do I need lawn care business insurance?

Lawn care business insurance safeguards investments, time, and effort.

Even basic coverage like general liability insurance is advisable.

Owners should assess worst-case scenarios, like equipment theft, to determine needed coverage. Insurance can be essential for replacing lost assets.

Compliance with state laws or client requirements might also necessitate specific insurance types.

State Requirements

Lawn care businesses might need to adhere to state laws mandating specific insurance types and amounts.

Workers’ compensation insurance is often necessary for businesses with employees, although requirements vary by state.

Commercial auto insurance is essential, especially for businesses using vehicles to transport equipment and staff.

Owners must verify their legal obligations based on their state’s regulations.

Client Requirements

Customers often demand proof of insurance from lawn care businesses before hiring them for services like lawn mowing or treatments.

General liability insurance, in particular, is crucial as it covers property damage or injuries on the client’s property.

Commercial clients like condo complexes and schools often have specific insurance requirements.

Even if not mandatory, having insurance sets a business apart from uninsured competitors, providing protection and a competitive edge in attracting new clients.

Business Property Protection

Lawn care business owners rely on essential tools and equipment. Insurance coverage, like tools and equipment coverage, provides financial protection if items are lost due to events like theft or fire.

Commercial auto insurance safeguards company-owned vehicles used in daily operations.

To avoid out-of-pocket expenses, business owners often opt for multiple insurance types for comprehensive property protection.

Business Liability Protection

Accidents can lead to costly lawsuits for lawn care businesses.

Equipment-related injuries or property damage could result in significant liabilities.

Without liability coverage, small-business owners might struggle to afford medical bills and damages, potentially facing bankruptcy.

General liability insurance helps cover costs and legal fees, providing essential financial protection.

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