Lumber yards play a critical role in the building industry. They supply contractors, homebuilders and individuals with the raw materials needed to construct a number of different types of structures. This business can be quite lucrative when administered properly, and an important part of managing this business is protecting it with a sound commercial insurance package. An independent insurance agent can help you build a lumber yard insurance portfolio specifically designed to meet the coverage needs of your business.
2014 Lumber Wholesaling Industry Facts From IBISWorld
- There are approximately 8,104 lumber wholesalers operating in the United States.
- These businesses employ nearly 105,000 people.
- The lumber wholesale industry is responsible for about $83 billion in revenue each year.
You Need Sufficient Property Damage Coverage
When you build your commercial insurance portfolio, a large portion of your coverage will have to do with property and equipment coverage. As the owner of a lumber yard, you face fire as your most damaging threat: this hazard can completely wipe out your entire inventory. Because of this risk, rates for property coverage at a lumber yard may be on the higher side.
- Building insurance: Your lumber yard likely includes at least one building. If you own the property, you will want to be sure that it is insured against structural damage. Building insurance provides this coverage for damage caused by disasters such as fire, heavy winds and even vandalism. Be aware, however, that policies will have coverage exclusions such as flood damage. Ask your insurance agent to review what is and is not covered before you make a policy selection.
- Contents insurance: This provides coverage for your business property such as your inventory, saws, computer systems and machinery. It is important to bear in mind that coverage for property that is stored outside will be limited. Because of this, it is important that your lumber yard engage in suitable risk management practices such as using tarps or roofed structures to protect your wood from the elements.
- Equipment breakdown coverage: If machinery, such as saws and forklifts, at your place of business malfunctions due to operator error, a power surge or a variety of other problems, this failure can cause a hardship to your lumber yard, particularly if you rely on this machinery as part of your normal business operations. Equipment breakdown coverage can cover cost of repairs, temporary rentals and in some cases even reimbursement for income lost during the time that machinery is out of commission.
- Flood insurance: As mentioned earlier, flood damage is not covered as part of most commercial insurance policies. Because floodwaters can cause significant damage to your lumber yard, you may want to consider supplementing your coverage with a commercial flood insurance policy, which is provided through the National Flood Insurance Program (NFIP). Your independent insurance agent can help you secure a policy.
Protect Your Lumber Yard From Liability Lawsuits
We live in a litigious society where people can sue anyone for anything – and often do. Even if the courts rule in your favor, your necessary legal defense fees can add up and create a financial hardship for your business. It is therefore crucial that you protect your lumber yard from the financial losses that can accompany a liability lawsuit by having proper liability insurance. Some coverage types you may want to make sure you include are the following:
- Premises liability insurance: This protects your business if a customer or other third party suffers an injury or property damage while visiting your lumber yard.
- Product liability insurance: This protects your lumber yard if a product that you sell causes property damage or injury to another because of a design defect or production flaw.
- Commercial auto liability insurance: If your lumber yard owns cars, trucks or vans, you will be required by law to cover them with a commercial auto insurance policy.
- Hired or non-owned auto liability insurance: If your employees use their personally owned vehicles to do jobs, your business could be named in a liability lawsuit if the driver causes an accident while doing a work-related activity. Hired or non-owned liability insurance is designed to protect your business in such a case.
- Umbrella insurance: Sometimes the coverage limits of your liability coverage are not high enough to adequately protect your business from an expensive liability lawsuit. Umbrella insurance provides you with extra liability coverage by taking over where your other policies leave off.
What Else Should You Have in Your Lumber Yard Insurance Portfolio?
In addition to the property and liability coverage mentioned above, there are other insurance coverage types that may be required, or are at least worth considering. They are the following:
- Business income insurance: A major disaster has the potential to force you to halt operations for an extended period of time while repairs are made. If the damage is caused by a covered event, business income insurance provides you with a continuation of income for up to one year while you make the necessary repairs.
- Workers' compensation and disability insurance: In a lumber yard environment, there is a significant risk of injuries to workers under your employ. In most states, employers are required to carry workers' compensation insurance, but even if your business is in a state that does not require it, this coverage is highly recommended. Not only does it provide coverage for medical treatment for injuries sustained on the job, it also significantly reduces your risk of facing a liability lawsuit.
- Employment practices liability insurance: Also known as EPLI, this insurance provides coverage for your legal defense and potential financial damages if one of your employees sues your business for an illegal business practice such as sexual harassment, discrimination or wrongful termination.
There may be other coverage options that can benefit your particular lumber yard. Be sure to discuss your business operations with a qualified insurance agent who can help you find the coverage you need to protect your lumber yard from the hazards it faces.
Get Help Building a Strong Lumber Yard Insurance Policy
Purchasing business insurance for your lumber yard can be a complex process, but when you work with an independent agent in the Trusted Choice® network, it is much easier. These agents can help you realize your various exposures and can then find competitively priced policies designed to provide the coverage you need. Contact a Trusted Choice agent near you to learn more about business insurance for your lumber yard.