Portable sawmill business insurance

[DPatton]

The wife and I have decided its time to form a small sawmill business LLC. So for the past several weeks I have made numerous inquiries to numerous insurance brokers looking for coverage. We so far have not had any luck in finding a insurance company that is interested in taking us on. Most either don't offer coverage in our state (Nebraska) or don't know anything about portable bandsaw mills. Some have no problem covering my support equipment such as my truck and gooseneck trailer. Only a couple have said that they can cover the mill with an Inland Marine policy.

The real deal breaker seems to be any occasional logging or tree felling that I may need to do in order to solidify a client. Although logging or felling is not a service I plan to offer I can definitely see the potential of gaining a client if i'm able to help them in this regard. But when I discuss this with the insurance pros they all tuck tail and run or they start talking about needing an arborist license and a whole different category of risk.

First of all I would like to hear from you guys where your getting your coverage. Also, do any of you provide this type of service if needed? What hoops have you had to jump thru to obtain coverage for this?

Thanks for your input and suggestions,
DPatton

[Crossroads]

To me the risk isn't worth the reward. In 2 years I've only had 3-4 people ask about falling trees and I would rather just run my mill, even if it cost me a job or 2 per year. If I was loosing a lot of business, I would put more thought into it. Then again, the mill isn't my main source of income, yet ;)

[WV Sawmiller]

DPatton,

   I get my liability insurance for my business though a Nationwide dealer. She is a broker for a company over in PA who provides the coverage I wanted. I self insure my mill and equipment rather than using an Inland Marine Policy. I felt the coverage they offered was not worth the cost and I could afford to replace my equipment but the liability was more than I could cover. I opted to set up as a sole proprietor once I found I was most likely still personally liable even under an LLC as the mill operator - which I always am.

   I get calls all the time from people who ask me about cutting a tree. Usually it is dead or dying and between and leaning over the power lines and the house and they are "willing" to give me half the lumber if I cut the tree and clean up the mess. I have a list of licensed and insured arborists I refer them to. I am not going to assume that risk. (I always introduce myself to any new tree service I see, give them my business card, ask them to refer me to customers looking for a sawmiller and I get their info and refer them to people looking for an arborist.)

    As a thought you might set up 2 companies - one to mill the lumber and another to cut down trees and use different contracts and different insurances for each and keep them widely separated. Just a thought - remember Free advice is worth what you paid for it. Or refer them to others with the training, equipment and insurance.

[Magicman]

I do not fell nor buck any trees.  That entails some liability hoops that I refuse to jump through.

[WDH]

I will not fell people's trees either.  Call a tree service. 

[Southside]

My logging morphed into the sawmill business and I will not fell a tree for a portable saw customer. You want trees felled then it is the other equipment that shows up. Tree service companies pay a hefty insurance premium for a reason.

[DPatton]

I do not fell nor buck any trees.  That entails some liability hoops that I refuse to jump through.

Magicman,
Thanks for your response. It looks like I too may have to forego being able to provide this service for my potential milling customers. As a just getting started business I don't know my clients needs well enough to know if it will make a difference or not. I just wanted to be able to offer it when the situation fit my best interest.
I wondered if anyone was doing this on occasion for their customer and how they are getting around the insurance hurdles in doing so.
I also wonder how the insurance providers will feel about me potentially using my truck and gooseneck to haul customers logs to the mill or lumber products off of the mill? I guess I need to discuss that with the potential providers as well before offering that service.

Again thanks for your response and if you don't mind me asking please PM me the company you use for your business liability and mill coverage?

DPatton

   

[Southside]

Nationwide is one of the few that will give you good coverage at affordable prices I found.  Luckily I was able to find a mutual insurance company that was even better.  I would try a Nationwide broker if you have not done so already.  If you start hauling logs and lumber then you will need to get into a Commercial Auto policy as well, which brings up the whole DOT potential depending on if you cross state lines, your GVW, etc.  Your mill is portable, light, and easy to maneuver and stay within the law, logs are heavy, need equipment to load and unload, and a magnet for DOT.  Look at keeping your offerings simple and concise, there will be some potential customer somewhere that you can't do everything for.  If they want their logs sawn then they will find a way to get the tree down or bring you the log if you can't go to them, otherwise they are a tire kicker.   

[DPatton]

Thank you all for sharing your experienced responses on this topic. I really thought this might be an important service for me to offer but you guys all seem pretty clear in your experience that it hasen't been a deal breaker in many cases.

The wife and I both work full time jobs for other companies so as a part time sawmill business the insurance premium could easily make or break this deal for us. Looks like I will need to leave the felling or logging to the guys who can afford to do it.

Again thanks for your responses and I'm still interested in hearing who you guys use for your liability and portable mill coverage.

[Magicman]

I also wonder how the insurance providers will feel about me potentially using my truck and gooseneck to haul customers logs to the mill or lumber products off of the mill? DPatton

I would be just as interested in how you were going to bill and make a profit loading, handling, and hauling customer's logs and or lumber.  ??

[DPatton]

I also wonder how the insurance providers will feel about me potentially using my truck and gooseneck to haul customers logs to the mill or lumber products off of the mill? DPatton

I would be just as interested in how you were going to bill and make a profit loading, handling, and hauling customer's logs and or lumber.  ??

Well that's a great question Magicman and I've always known that by adding those types of service costs to the final product could potentially make the final cost of the product to high for the customers.

  I'm not going to BS anyone as I didn't yet have and exact cost formula for those types of services. However charges for any felling or hauling would have been by the hour and mile. This has seemingly become a rather moot point though with the insurance companies not willing to provide coverage.

On the bright side of things the response's I'm receiving are all indicating to stay away from that end of the work and liability by sticking with milling for customers who have their logs and worksite in order. I think following this advise will help put me in a risk bracket that some insurance providers will hopefully compete for my business on.

[YellowHammer]

We also tried felling yard trees for awhile.  I had a crane mounted to a gooseneck.  I could fell, fish, and be home in a jiffy.  All without insurance, as I quickly learned in a heated discussion with my insurance agent. >:(

So, what I learned was to fell trees in a neighborhood or urban environment, I need Arborists insurance, which was incredibly expensive.  When I asked why, my agent told me that arborist have a 100% claim rate because at some point they will get hurt, killed, drop a tree on a house.

To haul logs or anything on my truck or trailer was simple criteria, again clarified by yet another agent.  If you are hauling anything that somehow involves money, or you getting money from services rendered on what was hauled, then it's a clear business transport and I was not covered under anything but a commercial auto or truck policy.  Furthermore, if I was caught hauling wood or logs for my business under my private insurance, for which this action was not covered, I could be arrested for driving without proper insurance.  Certainly my vehicle would be impounded until I had proper insurance. 

Also, as a State Trooper so politely informed me while writing a me a THOUSAND dollar ticket, that even though I had commercial truck insurance, and I had the correct liscense plate for my load, since I was was driving a business vehicle with a combination weight of over 10,000 lbs but under 26,000 lbs across state lines, (pickup truck and empty gooseneck) and didn't have a DOT number, I was in violation of so many FMCSA laws he had to give me a private "lights on" escort to the nearest weigh station so he could write me up and take a break when his hand got tired.

Although any commercial vehicle that has a GVWR of over 10,000 lbs must have a DOT number if crossing state lines, some states require a DOT registration even if only involved doing in-state commerce.  Nebraska is one of them. 
https://www.fmcsa.dot.gov/registration/do-i-need-usdot-number

Anyway, insurance can get out of hand, in a hurry.  Trucking laws and registration can get out of hand in a hurry.  Absolutely full disclosure to the insurace agents is a must.  When you tell them what you are doing, most will freak out.  Many will outright refuse coverage.  A few will cover you.  Very few.  Give them specific, real life examples of your coverage  scenario.  If it's not in writing, it will not be covered, period.  Another example, my trailer had been sideswiped by another driver.  It was covered by the other drivers policy.  When I called my company to ask about it they said good thing it wasn't my fault as my trailer wasn't covered.  I said, sure it was, I was told anything hooked to my truck was covered.  The response was "Mr. Milton, I have your policy right in front of me and I don't see that coverage, can you show me where it is??  No? Hmmm. Then it's not covered."

Anyway, I can't help with portable sawmill insurance but have been through the ringer on sawmill, lumber and log hauling insurance in general. 

[DR Buck]

I have all of my sawmill equipment insured and my liability covered by an Inland Marine policy underwritten by Scottsdale Insurance.   I pay around $1300 per year for it.

I do not and will not cut down a customer tree.

If I load and haul customer logs to my location for milling it's $65 per hour on top of the milling costs,  minimum hauling charge of $100.

I DO NOT deliver customer lumber!    They show up at my place with money and I help them load.   This is either green off the mill or from the kiln.    If I kiln dry, I call them several days in advance and tell them when they MUST be there to pick up as it comes from the kiln to their truck/trailer.    If they do not show up and I need the kiln their lumber gets stacked outside.   

[Tom the Sawyer]

I suspect that the GVWR of your 3/4 ton GMC is about 8500 lbs.  Take that and add the actual weight of your trailer (mill), and you are well over 10,000 lbs - welcome to USDOT.  If you only haul your own property, you will classify as a private motor carrier.  If you haul logs, they must be owned by you (have a receipt).  Haul a client's logs, or their lumber - public carrier.

Public motor carrier requires higher insurance.  Either way, you'll also be considered a class 9 hazardous material transporter - its not just that 5 gallon can of gas, even the fuel in the mill engine will count.  For a small operation, the record keeping seems absurd - but you have to do it.

In my area, there are about 25 tree services for each sawmill.  I wouldn't compete with them, promote your services through them.  They can also be a good source for logs; pay fairly, give them your cards and brochures to hand out.  Otherwise, you are the competition.  Be cautious about providing names of tree services to potential clients, unless you know they are licensed, certified and/or insured; whatever is appropriate for your area.

[longtime lurker]

May well be different there but here - and I would suggest that it's likely to be the same there - insurance as a logger is different to insurance as an aborist.

Check with some of the guys on the logging board, they'll know.

[Ianab]

May well be different there but here - and I would suggest that it's likely to be the same there - insurance as a logger is different to insurance as an aborist.

AND different to the insurance for a sawmill or a trucker. We have some local companies that manage to pull off doing all 4 at once, but they must be treading through a bit of a minefield to do it. And local insurance / liability laws are probably different to the US.

[WDH]

My sawmill is stationary.  I saw, dry, and sell lumber.  I have a general liability policy that covers customers on the property EXCEPT for the sawmill.  They are covered for being on the property, buying lumber, loading their lumber, etc.  However, liability around the sawmill is not covered and no customers can be associated with the sawmill while it is operating.  No liability coverage for customers being around or working at the sawmill.  The Underwriters on all my quotes consider the sawmill to risky and dangerous.  I also had to get a Commercial Auto Policy for hauling logs.  After talking with Robert (Yellowhammer) about his saga with the authorities when he got pulled over, I realized that I was wide open and not covered under my normal vehicle insurance policy.  And I bought an umbrella policy over all that, too.  You have to protect yourself, and it is not cheap to do that.  That is why this child has no compunction about charging a good price for my lumber  . 

[Magicman]

This is not "insurance" but my Sawing Contract addresses liability in the 5th paragraph:

5.  It is understood by the Customer that log handling and cutting may be hazardous.  Customer shall be responsible for the conduct of helpers and observers and agrees to hold Sawyer and Wood-Mizer Products, Inc. harmless for any injury or damage whatsoever to helpers or observers arising out of the operation of the mill and the handling of logs and lumber.  It shall be the Customer's duty and obligation to keep all children and observers out of the work area.
Customer represents that he is the owner of the logs and/or has the authority to enter into this
Agreement on behalf of all interested parties.  Dated this ___day of ____________,20___

Sawyer:________________________________Customer:_______________________________


Using a contract that is signed by both myself and the customer made both my Insurance Agent and Attorney feel much more at ease.   

[DPatton]

Thank you all for replying. Offering your experience and expertise has been extremely helpful to me!

YellowHammer,
I had already come to the understanding that my truck and gooseneck trailer would need to become commercially insured simply because I will use the truck to transport the mill to the customers site. And even though I may never haul a customers logs or materials I will still haul some of my own logs and materials as I have always done. I don't want to be caught splitting hairs on providing proof of who owns the logs or materials, so commercial auto insurance and DOT is a must.
  Thanks for the quick reference link to the DOT also.

DR_Buck

Thanks for the underwriter information and insight on hauling!

Tom the Sawyer

You are correct, the truck GVWR is 9500 so hooked up to the TK1600 ready to roll is probably approaching 14,000 to 15,000 Lbs, hooked on to a loaded gooseneck up to 23,500 Lbs.
  Thanks for your clarification between private carrier and public carrier. As I said earlier I'm not sure I want to be caught along the side of the highway with the responsibility to prove who the logs belong to. I have to decide if it is necessary or reasonable to buy up in coverage before I can offer this service to customers.

Longtime Lurker, and Ianab,

I have decided to leave the logging and felling needs of any potential customers to the guys who are licensed and already paying the insurance premium to do so. Thank you for reinforcing that decision.

WDH, and Magicman,

You guys have brought up a good topic that I will encounter on a daily basis when operating the mill and that is safe proximity of customers, observers, and tailers helping remove product from the mill or position logs to the mills loading arms and bed. What is considered (by insurance standards) a safe distance for non working observers or clients? What about tailers working to remove sawn product?


Again I sincerely thank all of you for your expertise and willingness to provide helpful responses,
DPatton

[YellowHammer]

Don't forget, I got busted complete unloaded, not hauling anything, didn't matter if I had my logs or someone else's.  My truck was commercially insured.  My plate was for commercial use.  My trailer was empty.  I was using a business truck and trailer on the Interstate.  I thought I was legal.  Nope.

Fines add up, I was told if I didn't get everything done in 15 days, I would be fined $1,000 per day.  I came home, parked my truck and got it done. 

Also, many commercial insurance carriers and states require a medical certificate if you are hauling commercial, public or private, at any weight rating, even if you are not at DOT or higher CDL limits.  Carry it with you.  It's a sweet $250 if you don't have it.   

[Resonator]

What Magicman posted in reply #17 is a legal "Waiver". By signing it the customer "waves" (surrenders) his right to sue. Along with this its a good idea to carry a printed diagram, for the customers to see, of the work area around the mill, with a highlighted "unsafe zone" for customers to keep out of while milling. If they go into this zone, work stops.

[WV Sawmiller]

   The Waiver sounds like good scare tactic but I would not want to test it in court.

[Southside]

YH -

For what it's worth that was a cheap pinch for sure on the part of that Trooper.  A little discretion on his or her part would have gone a long way in your scenario.  The intentional violator is supposed to be the target of enforcement action, not the guy who has done everything right only to find out that there is more to the convoluted code that 90% of officers don't understand.  Meanwhile U-ship is legal and FMCSA exempt - go figure. 

[Dana Stanley]

This is not "insurance" but my Sawing Contract addresses liability in the 5th paragraph:

5.  It is understood by the Customer that log handling and cutting may be hazardous.  Customer shall be responsible for the conduct of helpers and observers and agrees to hold Sawyer and Wood-Mizer Products, Inc. harmless for any injury or damage whatsoever to helpers or observers arising out of the operation of the mill and the handling of logs and lumber.  It shall be the Customer's duty and obligation to keep all children and observers out of the work area.
Customer represents that he is the owner of the logs and/or has the authority to enter into this
Agreement on behalf of all interested parties.  Dated this ___day of ____________,20___

Sawyer:________________________________Customer:_______________________________


Using a contract that is signed by both myself and the customer made both my Insurance Agent and Attorney feel much more at ease.  

Have you got a copy of your sawer contract that your willing to share? I mainly want to mill for myself, but wouldn't rule out milling for others.

[SawyerTed]

I've said this in a couple of different posts.  Develop company policy ( based on insurance, regulatory or personal guidelines) like:
Don't cut customer trees
Blades that hit metal cost $X
Customer must provide help/off bearers/tail gunners
I don't provide heavy equipment for moving logs
Lumber cut on shares is X%/X%
Don't haul customer logs

People don't typically question company policy.

Other policy may be necessary per your situation and capability.