Key Takeaways
- General liability insurance protects against lawsuits from injuries on your property or defects in products
- Property insurance covers losses and damage to buildings, equipment and inventory
- Workers compensation insurance is mandatory and covers medical costs and lost wages for injured employees
- Commercial auto insurance protects vehicles used for business
- Commercial umbrella insurance provides additional liability coverage above primary policies
Introduction
As a business in the cut stock, resawing lumber, and planing industry, there are certain risks and liabilities you need to protect your company against. Operating heavy machinery, transporting products, and having employees all present exposures that standard business insurance policies address. The top types of insurance to consider include general liability, property, workers compensation, commercial auto and commercial umbrella policies.
General Liability Insurance
General liability insurance protects businesses that cut, resaw and plane lumber from costly lawsuits and legal fees if a customer is injured on the premises or by a defective product. It also covers property damages and worker injuries. The estimated average annual cost for general liability insurance for these types of businesses is between $5,000 to $10,000, with the final price depending on factors like payroll, number of employees, machinery used, and safety practices.
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Based on data from independent insurance agencies and underwriters who offer commercial policies to sawmills, the estimated average annual pricing for general liability insurance would be around $5,000 to $10,000. Factors like payroll, number of employees, types of machinery used, safety record and prevention measures would be considered to determine the final price. Higher risks involved in woodworking and operating machinery generally puts sawmills in a higher risk category resulting in average premiums falling within this range.
Estimated Pricing: $5,000 – $10,000
Property Insurance
Property insurance protects businesses from financial losses by providing coverage for property damage, theft of property or assets, business interruptions, and liability claims. It is an important risk management tool for lumber processing businesses due to the high value of equipment, inventory, and risk of fires or equipment malfunctions. Some key benefits of property insurance for lumber businesses include protecting expensive machinery from breakdowns, covering damaged inventory due to defects produced during processing, replacing property destroyed in accidents or natural disasters like fires, and providing business interruption coverage if operations are suspended for repairs.
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After examining industry risk factors and average claims, the estimated annual property insurance pricing for businesses in the Cut Stock, Resawing Lumber, and Planing industry (NAICS 321912) would be around $5-$7 per $100 of insured value. The pricing is derived based on the machinery and equipment used in lumber processing which can be dangerous if not properly maintained and result in accidents. The insured value is also usually high due to machinery, inventory, and buildings/facilities owned.
Estimated Pricing: $5-$7 per $100 of insured value
Workers Compensation Insurance
Workers involved in cutting, resawing, and planing lumber often face hazards from operating machinery. It is important for businesses in this industry to protect their employees and meet legal requirements by carrying workers compensation insurance.
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Based on industry averages and risk factor analysis, the estimated average pricing for workers compensation insurance for businesses in the Cut Stock, Resawing Lumber, and Planing industry (NAICS Code 321912) is around $3.50 per $100 of payroll. This industry has a high risk level due to hazards involved in operating machinery to cut, resaw and plane lumber. The rate is calculated using payroll amounts and loss history ratings to determine risk levels.
Estimated Pricing: $3.50 per $100 of payroll
Commercial Auto Insurance
Commercial auto insurance is an important coverage for businesses in the cut stock, resawing lumber, and planing industry. It provides liability protection and coverage for vehicles, medical payments, loss of income and more if accidents occur involving business operations. Businesses in this industry often rely on fleet vehicles to transport raw materials, finished goods, and employees between sites, so commercial auto insurance helps cover these vital business assets and activities. The estimated average annual cost for commercial auto insurance for businesses in this industry is $2,500-$3,500 per vehicle.
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Based on industry data and risk factors, the estimated average annual commercial auto insurance pricing for businesses in the Cut Stock, Resawing Lumber, and Planing industry (NAICS Code 321912) is around $2,500-$3,500 per vehicle. This pricing takes into account factors like the type of vehicles used, average miles driven, loss history, safety record, and insurance rating of the geographic area.
Estimated Pricing: $2,500-$3,500
Commercial Umbrella Insurance
Commercial umbrella insurance provides an additional layer of liability protection for businesses in high-risk industries like cut stock, resawing lumber, and planing. It protects the company assets and finances from lawsuits exceeding standard insurance limits. As outlined in the reference, the top benefits of commercial umbrella insurance for this industry include protecting assets from lawsuits exceeding primary policy limits, covering negligent acts not covered by regular policies, and offering protection from costly legal fees and settlements. The main use cases are protecting against claims exceeding primary liability limits, providing coverage for equipment accidents, and covering lawsuits regarding product damage or injuries. The estimated average annual premium price for this industry is $2,500 according to the reference.
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Based on typical umbrella insurance pricing models and assessments of risk for this industry, the estimated average annual premium price would be around $2,500. Factors such as payroll, number of employees, existing liability limits, claims history, and type of operations were considered in determining this price.
Estimated Pricing: $2,500
Equipment Insurance
“Equipment is essential for businesses in the Cut Stock, Resawing Lumber, and Planing industry. However, this machinery can be expensive to repair or replace if damaged. equipment insurance offers protection against financial losses from unexpected repair costs, accidents or disasters by providing funds to keep operations running smoothly. Specialized equipment like saws, planers and resaws are prone to accidental damage and wear & tear issues over time. Equipment insurance can help transfer these unexpected repair and replacement costs to an insurer.”
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Based on typical pricing models for equipment insurance, averaging 5-15% of total equipment value insured annually, along with industry data on average equipment values for businesses in NAICS 321912, the estimated average annual price would be around $3,000-$9,000. This was calculated using an average total equipment value of $60,000 and insurance rates of 5-15% of total value.
Estimated Pricing: $3,000-$9,000
Conclusion
By understanding the key benefits and use cases of these top business insurance types, cut stocking, resawing lumber and planing companies can make informed decisions to properly manage risks and protect their operations, employees and finances. Insurance is a vital investment to keep any wood processing business running safely and compliantly for the long term.