When it comes to owning a business, there are many factors to consider when keeping your overhead costs as low as possible.
Since you are working for yourself, all the business expenses must come out of your pocket. With that, the last thing you want to do is spend an arm and a leg on overhead costs you could have avoided in the first place.
Insurance can be a significant expense for a business owner if you aren’t doing all you can to keep the costs low. For your business, you’ve undoubtedly already gone through the decision of full coverage vs liability insurance, likely landing on the option of liability.
The truth is, even liability insurance can cost you more than you may expect. Though your initial rate may seem great, many factors can bump up the price you pay significantly.
Cuts and amputations are some of the most common injuries to occur while working a landscaping job. With a claim such as workers comp on your insurance, your cost can rise more than you might think.
So what are the many factors that impact your liability insurance costs? And what can you do to prevent them? Let’s find out.
What is liability insurance?
Before diving into all the different ways you may have cost increases, let’s begin with a simple recap of precisely what liability insurance is and why it’s so important.
Landscaping can be a tricky business. As stated above, cuts and amputations are common in this industry. Beyond that, there is also the risk of property damage, misunderstandings between you and your client or you and competitors, potential disputes, and third-party injuries.
All these risks require protection in case they were to ever happen to you or your employees. With liability insurance, you will have a form of blanket coverage to protect you and your business from potentially dangerous circumstances.
Now, what exactly will affect the cost of your liability insurance?
Injuries at Work
Some jobs have an extremely low risk for injury. Landscaping is unfortunately not one of those jobs. There are many potential hazards for your employees between the heavy equipment operation such as mowers for the lawn, potentially large holes littered across the ground, and misplaced items such as rocks or sticks.
When an employee gets injured and a worker’s comp claim is filed, liability insurance is significantly impacted. You can expect to see a high rise in your cost due to your now increased risk level.
How to Prevent Injuries
Although it’s extremely unlikely you will ever be successful at preventing any and every serious injury from occurring in your lawn care business, there are ways to minimize the risk.
Providing training for your employees on proper equipment handling and use, holding safety meetings, and reminding yourself and them to be aware of your surroundings can be a great way to prevent a good number of major injuries.
When people are aware and properly trained, your risk of a worker’s comp claim will shrink.
The Amount of Business You Have
This one may seem a little unfair, but your insurance costs can increase if you gain more popularity in your landscaping business.
The reason for this is because the more frequently you are out on the job, the more likely you are to have an incident that can affect your insurance such as an injury or damaged landscaping.
Lawn care is a high-risk business, to begin with. Add to that working on multiple sites within a single day, and you can see why an insurance company will likely deem your business a little more high risk.
There isn’t much to be done on this factor, sadly. As a business owner, more business means more money. You’re likely not going to want to turn away more of that. So there is a good chance you will have to deal with a slight insurance increase because of it.
Your Employee Count
Piggybacking on the mention of more business causing your insurance rates to rise, the number of employees you have will likely do the same.
These two factors typically go hand in hand because more business will usually mean the need for more employees.
The reason this can cause an increase is that by hiring new employees, you are increasing the number of risk factors your policy now has. The more people you employ, the more people may be likely to fall victim to an injury.
Sadly, there isn’t much you can do about this price effector either. If you have the business and the need for employees to fill the work, it’s unlikely you’ll say no to hiring more people. Just be prepared for the possible cost increases you may see.
Where You do Your Business
You may love the area your clients reside in; however, it may not be extremely safe in the eyes of your insurance company.
A factor such as this can cause the cost of your liability policy to increase. Because you are putting your equipment and vehicles in an area that isn’t the safest, your insurance company sees it as a bigger risk.
This more considerable risk means they may charge you more due to their increased worry that something may happen while you are on the job, such as possible theft, vandalism, or assault.
If you are dead set on the location you are working in and don’t wish to move, prepare yourself for potential rate increases due to the area.
Increased Costs for Necessary Protection
It may seem unfair to have so many factors calculated into your liability policy. However, insurance revolves around the risk involved for your provider.
Certain aspects or instances in your business could result in higher rates. You may not always be able to control these things, but you will be prepared if you notice an increase in your policy cost.
You don’t want to assume you can get away with not having commercial liability insurance simply because you’re trying to save yourself some money. All it takes is one injury on the job, and you will wish you had the coverage.
It may take a few different agencies before you find the one that works for you. But having liability insurance covers you when it counts. That makes the cost worth it.