November 25th, 2020
Carpentry is a skilled trade specializing in the cutting, shaping, and installation of wood materials during construction.
Not only does the installation portion of the trade make carpenters insurance unique, but the cutting and storage of lumber also require an insurance company to have industry expertise to provide a quality quote.
For a carpentry business, the goal of insurance is to cover your liabilities for a good price and with the broadest, best protections.
In addition to coverage considerations, you might have certain insurance requirements to meet before you can even get paid if you are working for a property manager or general contractor.
In this article, we’ll help you work through these challenges so you can get the best value on your carpenter's business insurance.
Carpenters insurance usually involves four different insurance policies, depending on your specialization. Each policy plays a unique role in lowering your exposure to risk.
The most common policy that carpentry businesses utilize is the commercial general liability policy.
General liability insurance for carpenters protects your business from the financial fallout of injuring a person or damaging someone's property while performing your work. For example, if a cabinet you installed fell and injured a client, the general liability policy would pay your legal bills in the lawsuit and cover a judgment up to the policy limit.
Buildings and contents insurance covers the building (if you own one) and the contents within it for direct physical damage that occurs while at you facility.
The large amount of raw lumber and sawdust in carpentry facilities put them at a higher risk for fires to start and cause damage. This means that building and contents coverage is one of the most important policies you can buy, but the increased risk also makes it difficult to find a good rate. For this policy, we recommend working with an insurance broker that has experience in the wood-products manufacturing and carpentry industry.
If you are in a carpentry specialization that requires you to make certain products and deliver those products to the job site for installation (e.g., a custom cabinet maker), you will need an installation floater.
This policy covers property transported to or stored on the job site that’s awaiting installation. With this protection, if a car accident damages your work or your product is stolen from the site, you could recover your costs.
Finally, as a contractor, you have to worry about workers compensation insurance. This policy, required by law, pays for employee injuries and lost wages if they are injured while working for you.
If you are a self-employed tradesman, some states have exemptions on the requirement to purchase insurance, sometimes called an affidavit of exemption.
With that being said, if you are working for a general contractor or on commercial jobs, you might be required to have workers compensation, despite having no employees.
It is important to review the exclusions on your policy. Different specialties within the carpentry trade will include different exclusions.
For example, a framing contractor might have exclusions relating to liability arising out of their subcontractors. Whereas, a cabinet maker with a woodshop might have an exclusion that doesn't pay for fire damage if there is no sprinkler system (this is called a protective safeguard endorsement).
Your carpentry business liability increases the further employees work from the ground. This can potentially affect your general liability premiums, but it will especially affect your workers' compensation rates.
As a general rule, getting quality insurance becomes difficult when doing any work over three stories in height. If you are working above this distance from the ground, we recommend talking with a broker who is experienced in carpentry insurance services.
Insurance for carpenters can start as little as $500 per month for self-employed tradesmen who do low-hazard work, such as trim carpentry.
As your operations grow, the premium will scale up with your revenue and payroll. Additionally, if your operations start including riskier projects, such as working from heights or structural jobs, the premium will increase.
The first tip we have to lower your insurance premium is to make sure your business is classified correctly. Due to the nature of carpentry, there are quite a few carpentry class codes. For example, typing "carpentry" in just one of our insurance carriers yields these results:
Carpentry Contractors - Cabinet Building and Installation
Carpentry Contractors - Door, Window, or Garage Door Installation
Carpentry Contractors - Finish and Trim Work Only
Carpentry Contractors - Framing
Carpentry Contractors - Metal Ceiling or Wall Installation
Carpentry Contractors - NOC
Carpentry Contractors - Shop Only
And those are just the carpentry class codes. This does not include the other trade classifications that involve making and installing wood products.
In the short term, it might appear that misclassifying your business or not including every classification will be cheaper. Although it might be cheaper at the policy inception, getting caught for misclassification could result in a hefty audit, coverage gaps, and the insurance carrier having less trust in you.
A great way to get better insurance rates on your building and contents is to have a proper dust collection and fire suppression system to mitigate the chance of fire. In our experience, the increased risk of fire due to sawdust is the largest factor in determining whether you get a low property insurance rate.
When working with saws, blades, scissor lifts, and ladders, it is critical to have a safety manual that outlines the required safety gear and procedures to ensure that you and your employees are safe on the job.
If anything, this signals to your underwriter that you have a strong safety culture and are a great business to insure. Send all of your safety materials to your insurance broker so those documents can be shared with the insurance company.
Carpentry insurance is a specialized product that covers the risks carpenters face running their business. If you are looking to get a quote or have any questions about what carpentry insurance covers, let us know!
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