1. Welcome to PlowSite. Notice a fresh look and new features? It’s now easier to share photos and videos, find popular topics fast, and enjoy expanded user profiles. If you have any questions, click HELP at the top or bottom of any page, or send an email to help@plowsite.com. We welcome your feedback.

    Dismiss Notice

Potential Newb - Just a Few Questions for the Experts

Discussion in 'Introduce Yourself to the Community' started by RUJusten, Dec 3, 2013.

  1. RUJusten

    RUJusten Member
    from VA
    Messages: 47

    Alright Guys (and Gals),

    I have been approached by a close friend that owns a fairly large landscape company in the DMV (DC, MD, VA) for him to sub out some plowing to me this winter at a very lucrative rate. At first, the money seemed very enticing; however, I have plowed before for companies as an employee and 100% understand the cost associated with this business (maintenance, insurance, equipment, etc). The first question, among many, is if I have to have commercial insurance as a sub? All the contracts are in my buddies companies name and my truck would even have his magnetic logo on it. Is there risk as a sub?

    With all that said, I am still thinking very seriously about doing it. I want to keep my investment at a minimum to try this year out and see how I like plowing as a sub, taking time off of my full-time job to plow during snow storms, etc. As stated before, I am in VA - not talking northeast snow storms 3+ feet every year...hell, some years we are lucky if you move 4 inches of snow all year - so I started looking at used trucks with the plow setup already attached. I was able to find a late 80's F250 with 66k miles in very good shape (once I replace the exhaust) with a 7.5 Western Plow setup. Now like I said, this is an older setup but I want to keep my investment at a minimum. Going out and getting a $35k F250 with a power stroke and a $5k V-Plow to sub out work on a part-time basis 4 months a year just ain't going to happen.

    I guess what I'm wondering is if buying this old setup for $3k to sub my services out is worth it. Will the juice be worth the squeeze? With the older truck set ups, do they tend to be reliable? I always heard from my dad, they don't build things now like they used to...is that true in this industry (for the investment I'm making)? Don't get it twisted, I don't want to buy this setup and be breaking down every time the truck tries to move 2 inches of snow.

    All in all, I feel like this setup affords me the opportunity to make a few bucks at a minimal investment (for now) and I feel that the truck has been well taken care of - mostly used for personal plowing needs and small parking lots in VA. It has the 5.8l Windsor motor, C6 tranny and is a VA truck (not from anywhere up north - which means rust is limited). Let me know what y'all think and thanks for the time to read my post.
     
  2. thelettuceman

    thelettuceman PlowSite.com Addict
    Messages: 1,216

    Welcome to the forums.

    If that truck is mechanically sound, go for it. The price seems reasonable.
    I live in MD just outside the Baltimore area. No snow in 2 years. You can't be guaranteed any work.
    For liability>>>>If there is a slip and fall, You and the company you sub for will be getting sued.

    Good Luck to you.
     
  3. Chineau

    Chineau Senior Member
    Messages: 447

    Maybe the better question is can you afford not to have the insurance? Do you have the cash to self insure in the event of damages at some point something gets hit or broken how will you mange that? Before I got my first commercial property I put the insurance in place doing residential property. I would not consider it, you might like living dangerously though. Good luck.
     
    Last edited: Dec 3, 2013
  4. RUJusten

    RUJusten Member
    from VA
    Messages: 47

    I appreciate the info Lettuce - looks like an LLC needs to set up appropriately to protect assets. Is there anything on the plow that I should look for when raising it, lowering it or moving side to side? Obviously leaks in the lines and the pump should be listened to to make sure there is no grinding, etc. is there a way to check the hydraulic oil to check for a burnt smell or color? Anything else that I should inspect?
     
  5. RUJusten

    RUJusten Member
    from VA
    Messages: 47

    Chineau, has nothing to do with living dangerously. I was simply wondering the corporate insurance coverage that my buddy has for his company cover's subcontractors that he hires to do the actual physical plowing. The reason I'm asking is because all of the property contracts are in his company's name - and he hires us (persona md truck) to plow for the snow removal contracts he already has in place.

    Say for instance, I drive over a curb and tear it to hell. Who is on the hook legally? The company with the contract to plow the commercial property, or the subcontractor/truck that was hired to operate under the contract holders name. I guess this is something I should ask an attorney, not a snow plow forum.
     
  6. Mass-hole

    Mass-hole Member
    from Boston
    Messages: 35

    You NEED insurance - You may be covered by your buddy's company policy, but generally it is rare for a company to provide insurance to independent contractors. I do not, and cannot see why anyone would do so. Either way, you will need General Liability Insurance AND Commercial Auto Insurance. If you are getting it through your buddy you NEED to be an "Additional Insured" under his policy AND be a "certificate holder."

    Regarding purchasing new gear vs old. Everything breaks, and regardless of what you purchase - maintenance will be required. If you are able to perform repairs and preventative maintenance - go old. If not - go new. Either way, reliability is key because can lose a lot more money from lost revenue by skimping on maintenance if your truck doesn't start, or plow breaks. I tend not to buy used, except from a dealer, because the labor costs of looking for and evaluating equipment are just too high... and there is too much added cost trying to maintain different brands and vintage of trucks, plows, sanders, etc...

    In terms of LLC vs not, honestly there is little difference for you as a one man shop. Hypothetically, the LLC owns the truck and you drive the truck. You get in an accident, both you and the LLC can have liability. So the LLC has done nothing to protect your assets. To protect your assets get insurance.

    In terms of your last question, forget the curb - that's easily repaired and not big dollars. Think what happens if you hit a person, or another car with people in it. I have always viewed plow trucks and as insurance nightmare. You are driving a truck with 500lbs of steel hanging off the front of it, on roads with ****** traction, in weather conditions where you cannot see crap... A couple years ago one of my trucks was in an accident, and the police found my driver at fault because they concluded he was driving too fast. When you add hospital bills and lost wages for four people in the car that claim is 6 or 7 figures. I do not know what my insurer settled the claims for... However, the parties were made as whole to the extent money can make them. So my question is this, do you have the cash or assets to pay a claim of that magnitude? If not, how much remorse are you going to have knowing that someone else is stuck with a hospital bill and unable to work because of your negligence? Get insurance, and get a lot of it...

    When you are looking at a plow, I would look at the following:
    1. look at all the seals on each cylinder while the plow is moving to check for leaks.
    2. push against the plow from side to side to make sure the valves are closing and there is no air in the system
    3. Hook the side to side hydraulic lines together and push the plow from side to side by hand to check for binding
    4. push down on the lift cylinder by hand to check for binding
    5. listen to the motor - if sounds like ass you'll need a new one soon
    6. check voltage draw on the motor to make sure its not a strain on the system. A lot of people don't both putting in a high output alternator and high capacity battery. Both are good investments.

    Good luck...
     
  7. RUJusten

    RUJusten Member
    from VA
    Messages: 47

    Mass, VERY informative post and I appreciate the info. As for your question to me, I do not have $500k in the bank to hand over for sliding on ice and hitting someone. How does regular truck insurance with a 100/300/100 limits differ from a commercial policy? Obviously, I get the commercial policy protects a company and someone from coming after my house....but how would that be any different if I was driving to the store and I hit someone in my truck in the same conditions? Listen, I always over insure EVERYTHING I own....cars, trucks, boat, etc. but I just need to see if dropping $1000k a month for insurance on a part-time business 4 months a year when I may not plow at all is worth it - from the looks of it, the answer would be no (in my eyes).
     
  8. Chineau

    Chineau Senior Member
    Messages: 447

    Well done Mass.
     
  9. thelettuceman

    thelettuceman PlowSite.com Addict
    Messages: 1,216

    Well Done Mass >>> X 2
     
  10. Dogplow Dodge

    Dogplow Dodge 2000 Club Member
    from NJ
    Messages: 2,881

    Best Post I've ever read here. Please put it in the sticky, or give the guy an award for a well ..... extremely prophetic post...




    (it's prophetic, as it should be placed at the beginning of every thread regarding startups and insurance)
     
  11. Mass-hole

    Mass-hole Member
    from Boston
    Messages: 35

    This is really a question for your insurance broker. However, generally personal auto insurance covers use of a vehicle for personal use. A commercial auto policy covers use of a vehicle for commercial use. Plowing someone else's property for cash is a commercial use. If you have a claim on your personal auto policy for commercial use of your vehicle your insurer wont cover it. (Actually, they might, and then turn around and sue you for fraud). Either way you lose. General liability covers the slip and falls. Fortunately, its been a few years since I had one of those...

    You don't need to insure your vehicle commercially twelve months a year. My operations foremen tells me that many of my sub-contractors carry their commercial policies from November through May, and then switch back to personal auto policies the other months of the year. I think my crew vans are the only vehicles that we only use in the winter, and honestly, I am not sure if we carry insurance on them year round.

    Look, I don't know where you are in life, what your goals are, and what "very lucrative" rate your buddy offered you. Personally, my company hires subs because we can sell more services during the winter than we have equipment to deliver those services, and I am not going to tie up capital in gear that will sit ideal most of the year. So I hire sub-contractors that have another use for their truck or loader when they are not working for me. That said, it does not sound like you have another use for this truck your are considering buying. Thus, effectively, your buddy is asking you to tie up your capital in a piece of equipment that will sit for eight months of the year so he doesn't have to. Personally, I wouldn't make the investment...

    One last thing, why is your buddy putting his name on trucks that are owned by other people? I spend a lot of money building and maintaining my brand image, and there is no way in hell I would risk that investment by allowing an independent contractor to drive around with my company's name on his truck...
     
  12. Sawboy

    Sawboy PlowSite.com Addict
    Messages: 1,591

    Awesome post Mass!

    RU, the policy you have 100/300/100 covers truck vs property damage. ZERO vs personal injury. Ask me how I know this! Yep, learned the hard way. Got steered wrong many years ago. Learned that lesson. General Liability insurance covers the personal and no property. Auto covers the opposite.
     
  13. yard patrol

    yard patrol Junior Member
    Messages: 5

    I have a couple rental that I do the lawn and snow care for, last year I started doing it for other people. I have the truck in an LLC, same as the properties are in so I had commercial liability coverage already that covered what I was doing as for as an accident with me and another vehicle. I didn't think the insurance on the business policy was high (about the same as my car). All the snow contracts that I have done said that I am not responsible for slip and falls or acts of god. (not saying I couldn't get sued still) Anyways this year I had gotten two parking lots both had third party companies getting people to do work. (they have the contracts for me not me for them) The contracts wanted general liability and they expect your insurance to cover slip and falls and pretty much anything else added to it. Just that added $600 a year to my insurance. The insurance guy said it would stay the same unless I add another person to the policy or another truck. The good part is that it covers all the jobs i do. General liability also cover you in case you get hurt and loss of wages while out doing your job along with anyone you have stated working on your policy. Pretty much covers anything that could possibly come up in a law suit and they will defend you or pay out. To me adding the $600 insurance was a tough one on if I should keep pursuing in this or not since I don't do enough to pay for everything and make money, since I did now I'm going to have to get more work! I'm new to this business as well so hopefully this lets you know starting out I think everyone feels like after paying for everything they are working for free if not paying to work. Hopefully in the future it pays off and good luck.
     
  14. RUJusten

    RUJusten Member
    from VA
    Messages: 47

    I understand everything you all are saying, 100%. When I was approached by my close friend (who I have known for many years) about this potential opportunity, it sounded very enticing. Listen, $100/hr to move snow in a open commercial parking lot with a work truck I paid $3k for would make anyone my age look further into this. My father owns a small business and so I m very familiar with the whole commercial insurance aspect, cost, etc. I have worked in the service industry and totally get the fact that maintence is going to happen, transmissions are going to burn up, so on and so forth...I totally get it. The whole thought was to ease my way into this business on a part-time sub level while not having to worry about getting contracts, pleasing customers, dealing with all the other BS that is involved with keeping clients happy and referring my company to other potential customers. Mass, the reason for putting magnetic logo on the subs trucks while they are working on the property is so my buddies company is branded to these property managers (I am guessing). Each site has an actual employee of my friends company that is in a supervisory role overseeing the subs to make sure the job is going as planned.

    Where my lack of knowledge was/is is on the liability side - seems to be very clear in these last couple posts. I am at a very good place in life...have a very good full-time job (completely unrelated to this industry), have hobbies I enjoy, and a little nest egg of savings. I simply thought that this would be a good way to make some side money at a minimal investment by using my skill set and manpower/time to help out a friend that runs a very successful business. I totally get the subcontracting of services - it makes the most sense. If he didn't sub out work, he would have to have 50+ trucks all over VA, DC and MD when we got snow.

    As for another use for a work truck, there is ALWAYS use for a work truck....it's a $3k truck, not breaking the bank here on front end investment. As stated in my above post, going out and purchasing a $35k power stroke to move snow 3 months a year and have it sit doing NOTHING the other 9 months doesn't make any sense....we all know that.

    Just for the record, I appreciate all the insight. I know y'all are very knowledgeable in this industry, and appreciate y'all taking time to answer my questions. I also feel that I will need to discuss with an insurance agent to see how things work in my particular state. As for auto insurance, I carry liability for property and personal injury. This protects me if I am towing my boat and the brakes go out on my truck and I hit someone and break their back - my insurance with pay X amount of medical bills, property damage and other settlement money. I however do not carry commercial liability b/c there is no reason for me to at this point.

    Thanks again all!
     
  15. MSsnowplowing

    MSsnowplowing Senior Member
    Messages: 709

     
    Last edited: Dec 5, 2013
  16. OC&D

    OC&D PlowSite Veteran
    from Earth
    Messages: 3,064

    I think it's pertinent to mention a little something about insurance:

    Insurance, at its very heart, does one single thing, and that's to protect you from a loss. For that protection, you pay a given amount on a regular basis.

    It is important to keep in mind what and whom exactly it is that you're protecting with insurance. For instance, if you have a large, incorporated company, with a great deal of equipment, maybe some real property, etc.--let's say assets that exceed $100,000.00. In this case, you have a great deal to lose, possibly the entire company and your livelihood.

    Now take a small, single-person operation. Say this company is an LLC, or some other type of corporation. Say the truck that's used is actually registered in one's wife's name, and the company owns no assets to speak of. This winter, someone slips and falls in a parking lot that you plow. They sue your company(they can't sue you). They win, but there's nothing to win, because the company has nothing in the first place.


    All that said, in most cases you will need your own insurance to be employable as a sub for another contractor, and in many cases if you have your own customers, they'll want a certificate of insurance. I've always carried both liability and commercial auto, but I'm to the point now where I might just drop the liability altogether for the aforementioned reasons. My company, at this point, has nothing to lose.
     
  17. Meezer

    Meezer Senior Member
    from Indiana
    Messages: 291

    I guess if one is just doing residential, one can probably get by with just commercial Auto Insurance but commercial that may be another story.
     
  18. Dogplow Dodge

    Dogplow Dodge 2000 Club Member
    from NJ
    Messages: 2,881

    That isn't necessarily true. That particular point (highlighted in black bold above) is a state by state individual issue that you may have to contend with. The person who fell can still sue the driver of the vehicle, which, if you are a one man outfit, such as myself, that means me, the guy driving the truck. In NJ, they would not only sue the company plowing, but the land owner, the company who made the plow, the retail outfit that sold the plow to the company, the asphalt paving company that built the surface of the parking lot that the person fell down on, and so on.

    My insurance agent told me of a case in which this just happened. Even though the person shouldn't have been out during those conditions, everyone got sued by their lawyer, including the paving company that renewed the surface of the lot in question, back in July of that same year.


    The driver was also held accountable, even though it was a single guy with an LLC veil.

    You need to find out the laws particular to your state.
     
  19. OC&D

    OC&D PlowSite Veteran
    from Earth
    Messages: 3,064

    That's true, things vary from state to state. But I'd also be interested in how that particular case turned out for all of the defendants. Anyone can be named in a case, and it often happens, but in the end, what ends up happening?

    I'd be careful about what any insurance agent tells you, after all, their goal is to sell insurance, so it's ideal for them to convince you that you have far more exposure than you actually do. I'd be more inclined to talk to an attorney or two about it. That said, attorneys are always suspect as well.