Insurance requirements to bush hog, etc locally.

   / Insurance requirements to bush hog, etc locally. #1  

Gale Hawkins

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Joined
Sep 20, 2009
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11,954
Location
Murray, KY
Tractor
1948 Allis Chambers Model B 1976 265 MF / 1983 JD 310B Backhoe / 1966 Ford 3000 Diesel / 1980 3600 Diesel
I get asked from time to time to bush hog a small area or dig a footer for a carport.

In reading another thread the question popped up in my mind is insurance required if you do any tractor work for hire?

I have a farm policy but 'assume' it would not cover when working for hire. Would helping a neighbor without charge make any difference if something went wrong?
 
   / Insurance requirements to bush hog, etc locally. #2  
As an architect, I'm often asked for advice, and usually give it. Id be pretty un-neighborly not to. But it's a minefield. Even if I don't charge for that advice, I can still be sued if someone follows it and suffers loss or expense because the advice was bad. My insurer therefore doesn't like me giving free advice, even to family.

Doing freebies on the tractor is no different. If you make a mistake and someone suffers loss due to negligence, they can sue.

You have two protections: the first is to limit liability by operating as a limited liability company. Then the limit of your liability is essentially the assets of the company. If you're doing freebies, you'd likely have to demonstrate you were acting on behalf of the company and not as a private citizen. That might be tricky. If your sued as Mr Citizen, you can be stripped bare. Always best to operate as a limited liability company.

The second protection is insurance. An indemnity policy for third party damage of, say, $3 million will have a pretty hefty deductible. So make a mistake and it will still cost you even if it costs the insurance company more. And if you seriously injure someone and they are awarded damages in excess of the amount your insured against, you will be liable for the shortfall.

So the lesson is: if you do freebies (or even if you always charge), be aware of the risks, get limited and get insurance (preferably with a low deductible).

Edit: There is another course you can take. That is to get those you're doing a service for to sign a waiver. Example: some neighbors of ours use our riding ring in winter because during the wet season theirs is always waterlogged. We're not going to be un-neighborly and say no but we're not going to suffer the expense of insurance because we're doing someone a favor. So we have them sign a waiver. We prepared it ourselves but we had it vetted by a lawyer and my wife ran it by our local horse association. Both advised it would stand up in court. None of our neighbors has had a problem signing it.
 
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   / Insurance requirements to bush hog, etc locally. #3  
I get asked from time to time to bush hog a small area or dig a footer for a carport.

In reading another thread the question popped up in my mind is insurance required if you do any tractor work for hire?

I have a farm policy but 'assume' it would not cover when working for hire. Would helping a neighbor without charge make any difference if something went wrong?

There is no state statute in Kentucky that requires it, however, you may have a local city and/or county ordinance that does. Check with the county judge/executive's office and the mayor's office to determine if it is required. Noting the other post to this thread, the real issue is liability.
 
   / Insurance requirements to bush hog, etc locally. #4  
having a LLC can limit your personal liability for property damage but it will not help in personal injury cases.
another strategy to avoid losing your shirt (so to speak) is to put all your assets in your spouse's name.
but i think most of us do small jobs for others without being an LLC or having any insurance and things seem to work out just fine.
 
   / Insurance requirements to bush hog, etc locally. #5  
randy41 said:
having a LLC can limit your personal liability for property damage but it will not help in personal injury cases.
another strategy to avoid losing your shirt (so to speak) is to put all your assets in your spouse's name.
but i think most of us do small jobs for others without being an LLC or having any insurance and things seem to work out just fine.

The question posed was "would helping a neighbor without charge make a difference if something went wrong?"
Note the " if something went wrong". Sure, we all help each other and for the most part things work out fine. But if they don't, it's best to know where one stands. From that standpoint the question is a good one.

It doesn't matter if it's a freebie. And there's no question insurance and limited liability offer better personal asset protection than no insurance and unlimited liability. How much one covers ones *** is always a matter of personal choice. I help out friends and neighbors but I'm covered both ways. Nothing has gone wrong yet but I have some comfort if it does. As the saying goes, trust in God but still lock your car. JMO.
 
   / Insurance requirements to bush hog, etc locally. #6  
Just had this conversation with my ins agent. With my Farm policy if I am doing work for myself I am covered but if I am doing it for hire I need a commercial policy. So if I am helping my friend, neighbor, family I think I am ok. If you hire me to bush hog your lot I have no coverage.
 
   / Insurance requirements to bush hog, etc locally. #7  
My basic home owners policy covers me off the property IF I am not working for money. IF I work for money then I need a business policy.

We added an Umbrella policy and it works the same.

From previous TBN conversations and my own talks with my agent, a business policy to use the tractor is not expensive. BUT if you started working with a backhoe the cost goes up.

One bad accident could bankrupt a person if they do not have the correct insurance.

Later,
Dan
 
 
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