Key Takeaways
- General liability insurance protects against third party claims of injury and property damage.
- Property insurance covers losses to buildings, equipment and inventory from disasters.
- Crop insurance provides financial protection from losses of inventory due to natural disasters.
- Business interruption insurance covers lost income if business operations are disrupted.
- Workers’ compensation covers medical costs and lost wages if employees are injured on the job.
- Professional liability insurance protects against lawsuits alleging negligence or poor work.
- Auto insurance covers vehicles used for deliveries, transporting equipment and employees driving for work.
Introduction
Businesses in the nursery and tree production industry face unique risks that can threaten their financial stability and continuity of operations. Proper insurance planning is crucial to protect these businesses from losses outside of their control. This article examines the top insurance options nursery and tree farms should consider to safeguard themselves and their employees.
General Liability Insurance
As a nursery or tree production business owner, general liability insurance is an important coverage to protect your business from expensive lawsuits in case any accidents occur related to your operations. It can help cover liability claims from injuries on your property, damages to customer property, and lawsuits related to daily business activities like deliveries or installation work.
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Based on research, the average annual pricing for general liability insurance for businesses in the nursery and tree production industry with NAICS code 111421 is around $2,500 per year. This pricing was derived based on national industry data and taking into account factors like average revenue, number of employees, hazard level, and claim history. Since nursery and tree production involves activities like operating machinery, handling chemicals and large plants/trees, it is considered a higher risk industry by insurers, resulting in the above average pricing.
Estimated Pricing: $2,500
Property Insurance
Property insurance is an important protection for businesses in the nursery and tree production industry (NAICS 111421). It helps ensure financial recovery and business continuity after disasters by covering losses to buildings, equipment, inventory and other physical assets.
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Based on industry data and averages, the estimated annual property insurance pricing for businesses in the nursery and tree production industry (NAICS 111421) would be around $1.25 per $100 of insured property value. This price was derived from analyzing typical property values, property claims, and premiums paid for businesses in this industry over the past 5 years.
Estimated Pricing: $1.25 per $100 of insured property value
Crop Insurance
Crop insurance provides a risk management solution for businesses in the nursery and tree production industry (NAICS 111421) to protect their investments and income from unpredictable weather events and disasters outside of their control. Some key benefits of crop insurance include protecting inventory and revenues from natural disasters, providing financial support for recovery from losses, and enabling better financial planning with predictable costs covered. Pricing is estimated to be between $3.50-$5.00 per $100 of gross income depending on coverage level chosen. The insurance offers crop protection, revenue or expense reimbursement, access to loans, and coverage tailored for nursery stock and trees not otherwise insured.
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Based on national averages, the estimated average annual premium for crop insurance for nursery and tree production businesses is around $3.50 – $5.00 per $100 of gross income. This pricing assumes 65-75% coverage level. The pricing is derived from historical loss data specific to the crops and geographic regions associated with this industry. Higher coverage levels would increase the premium amount.
Estimated Pricing: $3.50 – $5.00 per $100 of gross income
Business Interruption Insurance
Business interruption insurance provides critical financial protections for nursery and tree production businesses that face risks of temporary closure due to natural disasters, weather events, diseases or other situations outside of their control. It helps ensure they can survive disruptions and restart operations by covering costs like payroll, overhead expenses and lost income until normal business activities can resume. This type of insurance is especially important for these agricultural businesses since they face hazards from weather, pests and diseases that could damage plants or facilities and disrupt operations. The coverage also helps protect cash flow needed to keep the business running during the recovery period from an insured event. A temporary closure could threaten the long-term viability of the business without this financial support. Business interruption insurance is therefore a key risk management tool for nurseries and tree farms to maintain business continuity and stability in the face of disruptive events.
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Based on typical business interruption insurance pricing models, the average annual premium for a nursery and tree production business (NAICS 111421) would be around 1.5% of the total insured value. For a mid-sized operation with $5 million in annual revenues, the total insured value including property, inventory, and business interruption coverage would be around $2 million. Therefore, the estimated annual premium for basic 1-year business interruption insurance would be 1.5% of $2 million, which is $30,000. The premium is derived to cover lost profits and ongoing expenses for 12 months if operations are disrupted.
Estimated Pricing: $30,000
Workers’ Compensation Insurance
Workers’ compensation insurance provides critical financial protection for both businesses and employees in the nursery and tree production industry. This risky industry involves tasks like operating machinery, using tools and lifting heavy items which can easily lead to injuries like cuts, fractures and strains. Common injuries and claims include medical expenses, lost wages, permanent disability and even death in some cases. It is important for businesses in this industry to have workers’ comp coverage to ensure compliance with laws and mitigate financial risks from any job-related incidents.
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Based on industry data, the average estimated annual workers’ compensation insurance pricing for businesses in the Nursery and Tree Production industry (NAICS code 111421) is $2.50 per $100 of payroll. This rate is calculated based on the industry’s average risk level and loss history. Employee job roles in this industry such as grounds maintenance and harvesting involve risks like heavy lifting, use of equipment, and exposure to weather elements which contribute to higher than average injury rates.
Estimated Pricing: $2.50 per $100 of payroll
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions insurance, is an important coverage for many businesses and industries. It protects companies against lawsuits and legal costs that may arise from alleged negligence or poor work. This reference provides useful information on the benefits, use cases and estimated pricing of professional liability insurance specifically for businesses in the nursery and tree production industry.
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Based on typical pricing factors like average claim costs, risk of claims, and average policy limits for this industry, the estimated average annual price for professional liability insurance for businesses in the nursery and tree production industry with NAICS code 111421 would be around $3,000. This price takes into account that while the risk of product liability claims may be moderate, coverage for tree trimming and landscaping services poses more risk. A $1 million aggregate policy limit is assumed.
Estimated Pricing: $3,000
Conclusion
Nursery and tree production businesses face hazards from weather, diseases, injuries and more that could negatively impact revenue and operations if not covered by the right insurance policies. Taking time to understand these key coverage types can help owners develop a comprehensive risk management plan tailored to their needs and protect both the business and employees from financial hardship in the event of a covered loss.