Workers Comp

[SixInTheWoods]

Not sure where to post this question, so please redirect me if needed. We bought a portable sawmill last fall and began lumber production for sale. I am transitioning to employees from independent contractors. I am not required to purchase workers comp insurance due to the size of our business (only 2 part time employees), BUT am considering purchasing coverage due to the inherent dangers of the job. We do not provide medical coverage, and should something happen I would like to have the best interests of the employees in mind. Thoughts? Recommendations for companies you've had good success with? My business is an LLC and we own certified tree farms.

I don't know what I don't know; please be kind

[Magicman]

Since I do not and will never have employees, your question is beyond me but my first thought is the attorney that set your LLC up. 

My Son just had to obtain workers' comp for his business, and I know from his talk that it is not a simple matter.

[Southside]

As soon as you say the words "sawmill" and "workers comp" be prepared to see a shockingly high quote, and one that may be hard to obtain, surplus may be your only option.  If I were you, and this was the advice I was given, find a way to code your operation as a manufacturing operation that has a bandsaw in the mix, otherwise it's a very painful endeavor.  

[John Mc]

Requirements vary greatly from state to state. I suggest seeking advice from someone familiar with your state's regulations regarding worker's comp. Here in Vt, we are not required to have it for sole proprietors or for owners of the company. Other than that, you pretty much have to have it for any employees.

(I also suggest filling out your profile to include your location, so folks familiar with your area can tailor their responses to any future questions you may have.)

[Dave Shepard]

I had to get comp for a small job years ago. As a timber framer, the rate was $8.36/$100 payroll. Sawmill was cheaper than that. Roofers and tree guys I've heard are at 100% of payroll. 

[B.C.C. Lapp]

As soon as you say the words "sawmill" and "workers comp" be prepared to see a shockingly high quote, and one that may be hard to obtain, surplus may be your only option.

And if that number looks scary take a look at what comp would cost you on a logger in Pa.  Simply cannot be done.    No way. That's why we are all contractors.

[SawyerTed]

If getting around workers' comp is impossible, a consultation with an independent insurance agent is needed.   You might get a referral to a commercial insurance agency.   

There's a good one in Greensboro, NC that has experience with sawmills, Southeastern Agency Group.  They would be experienced enough to guide you where you need to be.  

As mentioned before - the word sawmill conjures up  visions of whirling blades and chopping machines and steam belching vortexes just waiting to suck innocent machine operators to their doom.  It's your job to convince them otherwise.  

[SixInTheWoods]

Thanks for all the advice. I am not obligated to carry it in MS due to size of business, but it seems my attorney is the best place to start, as advised. A few brief internet searches have called the automated sales calls out of the woodworks, so I'll just dial this back until I consult with him.


And yes, the chopping spinning vortex of doom...I'm the daughter of an old forester--this is often his favorite topic when I tell him the things we are doing. ;)

[barbender]

 B.C.C, comp rates was one of the main factors that started the transition here from the typical 3 man logging crew of hand faller, cable skidder/operator, and bucker on the landing. There used to be an army of guys in the woods in that configuration.

 Loggers could get cheaper comp rates if they got their guys off the ground and into seats. It's still expensive though, and that's one of the things that move guys into cut to length equipment. The higher operating costs are offset by fewer employees, and being able to operate in a wider range of weather/ground conditions.

 Sorry that was somewhat off topic, I'm just trying to illustrate how comp costs have actually shaped the direction of the logging industry.

 Those high rates should also make any of us that work around sawmills, or in the woods, consider the danger of our professions. There's a reason that comp rates might be 100% for guys working on the ground. The insurance companies do the math, and the numbers don't lie🤷 It is extremely dangerous work!.

 Working around a portable band mill may not strike most of us as particularly dangerous, but compared to what the general population does it is very dangerous. You have heavy machinery moving around logs that sometimes weigh more than a car.

 We've lost dear Forum members in accidents working around their mills. 

[Jeff]

What a great post Burt.

[aigheadish]

Good on you for wanting to take care of your employees should the unfortunate happen!

[Magicman]

Very few loggers here have a chainsaw on the job.  One logger told me that if his insurance agent came by and saw a chainsaw, his insurance was instantly cancelled. 

I realize that this is not about workers' comp, but it's the same mentality.

[SawyerTed]

The insurance industry drives many things through their risk management which means "ways to prevent paying claims by identifying risks and reducing accidents as a result."   The profits from risk management have to be significant. 

Moving hand fallers into machine cutters is one of those.   Building codes are driven by the insurance industry.

As of late, several insurance companies are conducting residential home visits, taking photos and examining satellite images of properties.  After the visit and photos, they send a letter listing things that need to be fixed, cleaned up etc.  If you don't, they non-renew your insurance. 

Workers comp insurance does open a purchaser up for "risk management" visits and reviews.  They mean for those visits to be consultative and helpful but they can get kind of adversarial and punitive.  

[mudfarmer]

Pretty much covered but important to remember that private insurance companies are in one business and one business only, making money. They might have been started back in nineteen and five by a guy that wanted to make sure that his buddies running peanut shelling machines were not destitute if they got hurt but the only operating metrics at this time are spreadsheet numbers.

If you sign a contract with them please make sure you understand it and comply with it so you know you are not just burning money to feel good. Maybe even force some of those compliance and inspection visits so that you have documentation proving that you meet the terms of the contract.

[Otis1]

I generally think having workers comp is a good idea in case of a real serious injury. But there are some things to keep in mind/ stay on top of.

When I owned a house painting business, I had a recent ex-employee that hurt themselves skiing and claimed worker's comp. I didn't dispute it fast enough and apparently there is a strict timeline of procedure. That made me mad. Always open your mail from the insurance company/ state. It also caused my rates to go up significantly just having one claim.

Quick Edit: I didn't even know he filed a claim until the paperwork came in the mail.

Now, I only have occasional/summer employees. I always tell them that if they have a minor injury (stitches, eye scratch, etc.) I will just pay the bill and please don't involve workers comp if we can avoid it.

[Ianab]

Different scenario here in NZ. Accident Insurance is Govt run, and both compulsory and universal. A levy gets taken from your wages (and added to vehicle registrations and fuel). The rates vary but it's from about 1.6% for extra safe occupations (optomitrist / museum worker etc) up to 4-5% for loggers / fisherman / farmers. Again, getting forestry workers into machinery lowers their rate somewhat, but straight chainsaw logging isn't priced out of existance. Claiming doesn't affect your rates, but seriious accidents will draw OSH attention, and serious fines for safety violations. ANY accidental injury is covered (medical expenses and 80% of lost wages), but other compensation, even for permanant injury is limited. Ability to sue for personal injury is also limited, but if an accident involves an OSH prosecution, then some substantial compensation can be ordered by the court. 

The system isn't perfect, but it's universal. If it was an accident, it's covered. My Mother got stunk by a wasp, and went into shock a few years back. Ambulance (and fire dept to carry her out), 2 days in Intensive care, and another week in hospital. All covered. As she's retired, no income replacement or other compensation, but also zero out of pocket. 

Messy cases are things like when an old work injury develops  into something else later. Back or joint injuries, chemcical exposure etc. Then it's debatable if it's a work injury or just and old age medical condition. But any private insurer is going to argue the same point. 

Pretty much covered but important to remember that private insurance companies are in one business and one business only, making money. They might have been started back in nineteen and five by a guy that wanted to make sure that his buddies running peanut shelling machines were not destitute if they got hurt but the only operating metrics at this time are spreadsheet numbers.

Our regular Insurance Co is still an old school "Mutual". It's "owned" by the policy holders. But even then, the numbers in the spreadsheet are what matters. Even if profits aren't being syphoned out to shareholders, the company has to show a modest profit to stay in business. But as the shareholders are us, we don't expect a payout, reasonable rates is the "payout". 

The Govt Accident Insurance works the same. They have the payout figures for the various occupations, number of accidents, and the $$ they cost, and set the rates accordingly. The levy on motorbike registrations is higher than cars for example. If you have a minor (10 mph) crash in a car, you probably wont get hurt at all. Fall off a bike at even 10 mph, and it's likely you will be. They have the spreadsheets to prove it. 

But I guess the difference is that indiviudal premiums in those systems aren't based on claim history. They may give a discount of NO claims, but that might be 20% off your bill after a couple of years, or you get a cheaper rate if you set your excess at say $500, vs $50. 

[chep]

I had a job shoveling roofs once. The caretaker who hired me said "if you fall you're fired, if you hit the ground you're trespassing!" 

No workers comp there haha but what a struggle. 

I started a logging business with a partner, as owners we don't carry comp on ourselves. One day I hope we can afford to do so...
it is very expensive here in VT, especially being handcutters. We carry liability insurance (which helped when partner ran over a light pole in a parking lot with forwarder lol), but it don't help much otherwise. Good luck

[barbender]

 Chep, I've heard of some big mills requiring requiring contractors to show proof of workers comp. Even when they are like your situation. 

 A friend was contract cutting in Georgia, as a sole proprietor/operator. The mill required him to get a certificate of exemption. I don't remember who provided it, I do remember he had to pay for it because he was ticked! Having to pay $$ for a piece of paper saying you are not required to pay money, for insurance you can't use.

[OH logger]

I'm an Ohio master logger and it's a voluntary program.  In that program you must have workers comp IF you have employees.   I don't have employees but I still have to be enrolled in the workers comp program and pay $120/year and report zero payroll.  What all that's for I have no idea.   Ridiculous 

[scsmith42]

Thanks for all the advice. I am not obligated to carry it in MS due to size of business, but it seems my attorney is the best place to start, as advised. A few brief internet searches have called the automated sales calls out of the woodworks, so I'll just dial this back until I consult with him.


And yes, the chopping spinning vortex of doom...I'm the daughter of an old forester--this is often his favorite topic when I tell him the things we are doing. ;)

Welcome to the FF!

Re Workmans Comp, if you have Farm Bureau insurance, in some locations they will include workmans comp for a couple of employees as part of the farmowners insurance policy.  Some of their underwriters will include a farm based sawmill as part of their coverage, and others wont, so you'll have to check with your agent and their underwriter.

IF FB will cover it, it's the best deal there is on workmans comp.

[barbender]

OH logger, what it's for is someone thinks that $120 should be their's, instead of your's😊