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Proper insurance for part time plower???

Discussion in 'Business Fundamentals' started by Sno ballz, Oct 18, 2005.

  1. Sno ballz

    Sno ballz Member
    Messages: 35

    So here is my problem:

    I am going into my first year of plowing. I cant afford to drop my day job yet and go full time into plowing, so I will be only part time this season. My main focus will be residential and possibly sub work for another plow company.

    I want to do things right and be properly licensed and insured. The problem is, if I do not have enough revenues coming in from plowing, how do I arrange to be properly insured?

    Please offer insight.....thanks!

    Sno ballz
  2. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    I started exactly the same way five years ago. Now, you're not going to like this, but the first winter I didn't make enough to make back what the general liability cost. Not even considering the commercial vehicle insurance, the fuel, the $1500 in truck repairs to the front suspension and the alternator that got fried. The second winter, I made expenses but not the cost of the GL. The third winter, I pretty well broke even. Last year was the fifth winter and did very well. Even with equipment depreciation, I wasn't showing a profit on the taxes. My accountant even warned me that the IRS might challenge it as a hobby rather than a business. I keep real good records to show expenses, advertising, bids and that I was doing everything in a business-like manner.

    Bottom line, your fulltime job may have to subsidize your plowing.
  3. Sno ballz

    Sno ballz Member
    Messages: 35

    Thanks Mick, for the response.

    If you don't mind me asking, how many accounts did you have in your startup years. Were they commercial or residential or a blend?

    In all honesty, I'd be more than exstatic if I made just enough this season to pay for the Sno-way 26 I just bought.:D

    Sno ballz
  4. hickslawns

    hickslawns Senior Member
    Messages: 627

    Sno ballz,
    Welcome to the world of plowing! Good news is this: You are asking these questions now rather than when it is too late. Other good/possibly bad news is insurance varies from state to state. Mine is based on several factors. Amount of general liability. Do you do commercial and residential or do you also do public roads. Amount of payroll. The other big factor is location. I specifically double checked with my insurance man this year after seeing how much some of these guys on plowsite are paying. Basically it is like any other insurance. The bigger the city, the more likely you are to have a vehicle stolen, hit and run, vandalized, etc. This also means the more likely you are to have some jerk claim you created a situation which caused a slip and fall or other possible law suit. So being in the Detroit area, I am going to guess you will pay more than someone in a small town. I was also told the more snow the area receives, the more the insurance. Common sense, more snow equals more opportunity to need to use your insurance.
    Here are the upsides. If you are already making the truck payments, insurance payments, fuel, cell phones, license plates, etc., now you are going to pay a little more for insurance, but you are going to have some tax advantages. Talk to an accountant, or do a lot of homework, but bottom line is you had to pay most of these expenses before and now you get to write some of it off. Don't be discouraged about the numbers on your taxes. Like Mick said, sometimes it takes a bit to get this thing rolling. You may have some rough years.
    Talk to the local contractors to see what they expect as far as your insurance is concerned. See what they expect from you, and if they are looking for subs. Let them know of your availability. Also, just tell your insurance people what you are getting into. They will guide you thru. If they are honest people, they will not want you set up for failure. If they want your business as your plowing business grows, they will make sure you are properly covered in your area. Best of luck in your new endeavor!:gunsfiring:
  5. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    Really, the NUMBER of accounts is irrelevant. It's the number of hours plowing that will make the difference. You could have 20 accounts; each about 5 minutes with a ten minutes drive from one to the other. You'd be out there almost five hours but only making $375 (assuming you charge equivelent to $125/hr). Or you could have three accounts side-by-side - each taking an hour and you make $375 in three hours with no travel-related costs.

    But, to answer your question- the first year I didn't have any regular accounts. I took one-time calls. The second year I think I had six with a mix of residential driveways, a commercial and a couple private roads.
  6. Grn Mtn

    Grn Mtn PlowSite.com Addict
    Messages: 1,644

    This is the best idea for you. You won't make as much money as if they were yours, but at least you know what your going to make. And you get paid whether or not the customer does. I subbed my first two years, 25 residentials and I picked up about 6 for myself. Even though my six paid me almost as much as the 25 subs, it was still great experience and a good way into the business.
  7. Robbie Rooster

    Robbie Rooster Member
    Messages: 33

    Talk to your insurance agent and be completely honest with what you will be doing. You may or may not need a commercial policy. My wife woked for an insurance company(maybe that helped) but since plowing was not my main source of income they set me up under a business venture with general liability insurance. This only cost me about $200 a year and was cover for somewhere around 600k. Then I added an umbrella policy over our policy for 1 million. That was only $300 a year and covers my business, the house, cars, trailers, and her daycare business. They insure my plow for $30 a year for full replacement value, even if I damage it. On another note, I too was only going to do residential accounts.. Ha! we'll I signed a commercial just plowing. Then they asked for sidewalks and salting and sanding of the parking lot a month into the season. Of course I can't say no. I ended up salting and sanding with a big ice scoop throwing it from the back of the truck. This year so far I have 3 commercial accounts and 2 residential. I bought a tailgate salter/sander for this year. I still have not made back my money I paid for the plow last year. It will take time to make your money back. I hoping to make it all back this year, if not then next year as long as I don't keep buying things. Bottom line is you want to cover your a**. If it's going to be a hobby it may not be worth the trouble. But if your looking to grow into a business then go for it. My wife has been real supportive and says that in 2 years I can quit my full time job and give it a go full time(along with the lawn care). It will take a while to get there, but better to work into it slow than just jump in. my opinon. Good luck! It will work out. Just be expected for the unexpected.
  8. snyps

    snyps Senior Member
    Messages: 101

    I am having the same problem. The people I am going to sub for, want a 500,000k "Business Liability" policy. First company I talked to, who I have a homeowners, life insurance, vehicle insurance, umbrella policy for renters though wouldn't cover me because I couldn't prove any of my 7 years of experiance (needed w2's and I used to get paid under the table). The next place I called said 2,400 upfront for the coverage for the year. :eek:

    I am going to call some insurance companies that other subs that I know go through, and maybe I can get coverage cheaper. One friend is getting it for $750 a year.

    Blows my mind that it will be this much, espically I called my insurance company before I got into buying equipment and a truck, they quoted me $300..

    Ohh well, guess I won't be making as much as I hoped this year.
  9. Banksy

    Banksy PlowSite Veteran
    Messages: 3,113

    I called State Farm who I have my truck and house insured with. The guy called me back a day later and said that he could not find any policy for part time plowing. He said I might have to change my truck coverage over from personal to commercial and then get additional coverage for plowing. I am in Raleigh NC, we do get enough snow to plow, but not as much as up north. Plowers are few and far between here, so there is plenty of work when it is needed. My point is that I am also looking for affordable, but quality insurance. If anybody has a company to recommend let us know.
  10. Sno ballz

    Sno ballz Member
    Messages: 35

    I have had State Farm for my auto and home owners insurance since 1990. When I called to get insurance for snowplowing, my agent told me that State Farm DOES NOT have policies for snowplowing period. Too much liability, and too many claims I'm told. So, now I have to shop around to see whats out there.:mad: :cry: :(

    Sno ballz
  11. LuffTruckingLLC

    LuffTruckingLLC Junior Member
    Messages: 16

    I also have state farm and they told to plow away as long as its not used 51% or more for commerical use. Try to call a few more state farm agents. Tell them to call the underwriter. Thats who my agent got the info from. good luck Just remember to raise your liability limits
  12. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    Any agent who says "just do this" or "just do that", I'd suggest - Get it in writing.
  13. snyps

    snyps Senior Member
    Messages: 101

    Some of my friends are useing Farm Family. I called this morning and are getting quotes on all of my insurance needs. I will let you know what they say. My friends are paying about 650 - 750 a year for $1,000,000 of coverage. They are all sub-contractors, so I am thinking that is about the same as what I will pay.

    Good luck and I will keep you updated.
  14. 042500hd

    042500hd Senior Member
    Messages: 251

    Buffalo Rates

    Snyps where are you at in Buffalo? My GL policy last year cost me $1200 my agent set me up as a landscaper who plows "part time". There are also umbrella policies that can be purchased through you regular auto policy that will cover your plowing. Get back to me and I'll tell you what I know.
  15. snyps

    snyps Senior Member
    Messages: 101

    I am from amherst, but currently live in N. Buffalo. I finalized my quote today with farm family, seems like a great deal with not a huge cost.

    $690 Commercial General Liability for $500,000 ($641 for $300,000)
    $1600 Commercial Auto $500,000 across the board (I can keep it for 6 months and then switch to a Personal Auto)

    That is not that bad at all

    Everyone, I would recomend that you call Farm Family if they have it in your area. Here is their website to find an agent http://www.farmfamily.com/

    Ray call Kathy at farm family at 204-9093 to get a quote, you might be surprised what is out there. She is the local buffalo agent. Tell her that Robert Abrams sent you if you don't mind.

    Let me know if you have any other questions
  16. plowsled

    plowsled Junior Member
    Messages: 4

  17. Kramer

    Kramer Senior Member
    Messages: 386

    I'm looking for a good carrier myself.

    FYI,, general info for Mass..

    My auto insurance agent said that you need to change your plates to commercial to start with. He also stated that your auto ins covers some, but don't get out of the truck and shovel and forget any slip and fall. It only helps if you back into a mailbox for instance...big deal!

    General liability was quoted at $1100 for $300,000..about $1400 for $1 million. I think thats steep.

    Just general info in case any Mass guys were wondering.
  18. Olderthandirt

    Olderthandirt Member
    Messages: 74

    You only have liability coverage on your vehicals and property damage.
    If someone slips and sue for "altering mother nature" you have no coverage and are fully liable. As someone said if its not in writing on your policy you don't have it when you need it.
  19. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Buffalo rates

    Don't forget that you live in the city their going to hit you harder for ins.I have mine through Ohio casualty ins co. And that came from M&T bank total cost was $870. truck ins through erie under 1000.
    Maybe bump up your deductible?
  20. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    Finally, an insurance agent that seems to be steering you in the right direction. That's about what I pay and I consider it relatively cheap, considering what I read some other guys pay in other states.