Running a tree service company means managing serious risks every single day. Your crew works with chainsaws, climbs 50-foot oaks, operates chippers, and maneuvers near power lines. It's demanding, skilled work—and it's also one of the most dangerous jobs in America. That's exactly why workers' compensation insurance isn't just a good idea for tree service businesses. In most states, it's the law.
Workers' comp protects your employees if they're injured on the job, covering their medical bills and lost wages while they recover. Just as importantly, it protects your business from potentially devastating lawsuits. Here's what you need to know about workers' compensation for tree service companies, from legal requirements to class codes to strategies for keeping your premiums manageable.
Is Workers' Comp Required for Tree Service Businesses?
The short answer: yes, if you have employees. Workers' compensation laws vary by state, but nearly every state requires coverage once you hire your first employee. Texas is the notable exception, where workers' comp is optional for private employers—though most choose to carry it anyway because the alternative is being open to employee lawsuits.
Some states have different thresholds. Florida, for example, requires coverage if you have four or more employees in construction-related trades, which includes tree service work. North Dakota requires all employers to obtain coverage through the state-run monopolistic fund. The penalties for not carrying required workers' comp can be severe—think hefty fines, stop-work orders, and even criminal charges in some jurisdictions.
Even if you're a sole proprietor with no employees, you might want to consider buying coverage for yourself. Most states allow business owners to opt into workers' comp, which can be valuable protection if you're still climbing trees or operating equipment alongside your crew.
Understanding Class Codes for Tree Service Work
Your workers' comp premium is largely determined by your classification codes, which describe the type of work your employees perform. The National Council on Compensation Insurance (NCCI) maintains these codes, and most states use the NCCI system or a close variation.
For tree service companies, the two most common codes are:
Class Code 0106 (Tree Trimming, Pruning, Spraying, or Repairing): This covers the core tree service work—climbing, cutting, removal, stump grinding, and emergency storm work. It's one of the higher-rated classifications because of the injury risk. Rates for 0106 can range from $8 to $15 per $100 of payroll depending on your state and loss history.
Class Code 0042 (Tree Pruning, Spraying—Ground Level Only): This applies to employees who work exclusively on the ground, such as those who only operate chippers, handle brush, or drive trucks. The rates are lower because these workers aren't exposed to the same fall hazards as climbers.
Getting your classifications right matters. If all your employees are classified under 0106 but half of them never leave the ground, you're overpaying. On the flip side, misclassifying a climber as ground crew to save money is insurance fraud and can result in claim denials and policy cancellation. Work with your insurance agent to ensure everyone is classified accurately based on their actual duties.
What Does Workers' Comp Cost for Tree Service Companies?
There's no one-size-fits-all answer, but tree service businesses should budget for workers' comp premiums in the range of $3 to $10 per $100 of payroll as a baseline. For riskier classifications like 0106, that number climbs higher—sometimes significantly higher if your experience mod is above 1.0 or if you've had recent claims.
Let's say you have five employees with a combined annual payroll of $250,000, and your average rate is $8 per $100 of payroll. Your base premium would be around $20,000 per year. But that's before your experience modification rate is applied.
Your experience mod (often called EMR or ex-mod) is a multiplier based on your company's claims history compared to other similar businesses. A mod of 1.0 is average. If you have a strong safety record with few claims, your mod might be 0.75, which would reduce that $20,000 premium to $15,000. But if you've had multiple serious injuries, your mod could be 1.3 or higher, pushing your premium to $26,000 or more.
Other factors that influence your premium include your state (rates vary widely), your claims history (even a single large claim can haunt you for three years), your payroll (higher payroll means higher premiums, all else being equal), and any safety programs or certifications you maintain. Insurers look favorably on companies with documented safety training, regular toolbox talks, and a culture of prevention.
Strategies to Lower Your Workers' Comp Costs
Workers' comp is one of your biggest operating expenses as a tree service business, but it doesn't have to break the bank. Here are practical ways to keep costs down:
Invest in safety training. TCIA (Tree Care Industry Association) offers excellent safety programs and certifications. The upfront cost is minimal compared to the premium savings from fewer claims. Regular training on proper climbing techniques, chainsaw safety, chipper operation, and hazard identification can dramatically reduce your injury rate.
Implement a return-to-work program. Getting injured employees back on light duty as soon as medically possible reduces claim costs and improves morale. Even if a climber can't work at height, they might be able to handle equipment maintenance, answer phones, or assist with estimates during recovery.
Classify employees correctly. Make sure your climbers, ground crew, drivers, and administrative staff are all in the right classification buckets. Overpaying because everyone is lumped into the highest-risk code is money left on the table.
Shop around. Workers' comp rates can vary between carriers, especially if you have a good loss history. Work with an independent agent who represents multiple insurers and can find you the best combination of price and service.
Consider pay-as-you-go. Many insurers now offer pay-as-you-go workers' comp, where your premium is calculated and paid based on actual payroll each pay period rather than a large upfront estimate. This is especially helpful for seasonal tree service businesses that have variable payroll throughout the year.
What Happens When an Employee Gets Injured?
Even with the best safety practices, injuries happen in tree work. When they do, your workers' comp policy kicks in to cover medical expenses, rehabilitation costs, and a portion of lost wages (typically two-thirds of the employee's average weekly wage). In exchange for these benefits, the injured worker generally cannot sue you for negligence—this is called the 'exclusive remedy' provision, and it's the core bargain of workers' compensation.
When an injury occurs, report it to your insurance carrier immediately—most states require notification within 24 to 72 hours. Document everything: witness statements, photos of the scene, equipment inspection records, and the injured worker's account. Cooperate fully with the claims adjuster and be proactive about staying in touch with your employee during their recovery. The way you handle an injury can affect both the claim outcome and your future premiums.
Getting Started with Workers' Comp for Your Tree Service
If you're just starting out or need to update your coverage, begin by talking to an insurance agent who specializes in contractors and tree service businesses. They understand your industry's unique risks and can help you navigate the classification codes, find competitive rates, and structure your policy correctly.
Be prepared to provide information about your payroll by job type, your business operations (what services you offer, what equipment you use, whether you work near power lines), your safety programs and training records, and your claims history for the past three to five years if you've had previous coverage. The more detail you can provide, the more accurate your quote will be.
Workers' compensation isn't optional for tree service businesses—it's essential protection that keeps your employees safe and your business viable. Yes, it's expensive. But the alternative—an uninsured workplace injury that leads to financial ruin—is far worse. Treat your workers' comp policy as the investment it is: a way to protect the people who make your business possible and to build a sustainable operation that can weather the inevitable risks of tree work.
