Author, Rory Anderson, Account Executive, Rancho Mesa Insurance Services, Inc.
Tree care companies use specialized vehicles and equipment to perform their work. These assets are vital to the success of the company. To maintain their effectiveness, the machines need routine maintenance and upkeep. Issues arise when they break down, so it’s important to repair them immediately to limit business interruptions such as decreased productivity and profitability. The maintenance of the machinery can be a full time job, and some tree care businesses are lucky enough to have an employee, or a team of employees, dedicated to shop maintenance. This type of work is a specialized skill and represents a key role within the organization. The intent of this article is to define how to properly classify these operations, so your company is prepared for any issues that may come up at the audit.
Workers’ Compensation
The Workers’ Compensation Insurance Rating Bureau (WCIRB) has created a specific class code for the maintenance of equipment and vehicles: 8227 Construction or Erection of Permanent Yards of Shops, which ONLY applies to the construction industry. In Appendix I, the WCIRB defines which industries are considered construction. Tree care, is not included on this list. Therefore, the WCIRB says, you must classify these operations in the governing class code, which is 0106 Tree Trimming, Repairing or Trimming. In fact, the WCIRB’s definition for 0106 Tree Pruning, Repairing or Trimming states that shop and yard storage operations are included: “TREE PRUNING, REPAIRING OR TRIMMING — N.O.C. — hand or mechanical power — including ground crews and shop, yard or storage operations.”
General Liability
Unlike workers’ compensation, in the tree care industry there is a general liability (GL) class code dedicated to the employees that are working on the maintenance of their own vehicles and equipment: 91590 Contractors Permanent Yards – Maintenance or Storage of Equipment or Material. It’s important to note that this class code does not consider maintenance or repairs on machinery or equipment other than those owned by the tree care company. The use of this code on your policy can be beneficial because the rate is usually cheaper than the tree care GL rate: 99777 Tree Pruning, Dusting, Spraying, Repairing, Trimming or Fumigating. So, it is safe to split payroll between these two class codes accordingly. Remember to keep proper records segregating the wages earned by your employees.
Overall, maintenance and repair employees are essential for maintaining the operational effectiveness, safety, and profitability of a tree care company. It is important to understand how to properly classify your equipment and vehicle maintenance operations so you can align your insurance policies correctly and avoid costly mistakes at the audit.
If you have questions or would like me to audit your current policies, please reach out to me at (619) 438-6437 or randerson@ranchomesa.com. I’m happy to help!