From major buildings to smaller home improvement projects, lumber yards are a vital resource for most construction projects. However, there are many risks that come with owning and operating a lumber yard, including high fire exposure and the risk of employee injury. It is important to maintain an extensive range of business insurance to financially protect your lumber yard in the event of a disaster or accident.

What insurance coverage do I need for my lumber yard?

There are many types of insurance coverage to consider, but these policies are particularly relevant to lumber yards:

Workers’ Compensation Insurance

Workers’ compensation insurance is an incredibly vital policy for lumber yards because employees are engaging in strenuous manual labor and working with dangerous equipment, such as saws and forklifts. For instance, sprains, strains, and back injuries are just a few of the common injuries associated with heavy lifting. 

Although you can try to mitigate the potential for injuries by training your employees on proper lifting techniques, providing adequate protective equipment, and maintaining a clean workspace, accidents are impossible to avoid in such a rigorous environment. This is where a workers’ compensation insurance policy comes into play. 

Workers’ compensation insurance covers the medical expenses and lost income of employees who are injured or fall ill while working. Additionally, this coverage provides funds for funeral expenses and death benefits for an employee’s surviving dependents in the event of a work-related death. In almost every state, workers’ compensation coverage is legally required for businesses that employ others. 

Example:

• One of your employees suffers a chainsaw kickback injury, and he requires serious medical attention and surgery. Your insurer will provide funds for his medical expenses and a portion of his lost income while he is unable to work. 

Commercial Property Insurance

The biggest property risk for lumber yards is exposure to fire. There are multiple ignition sources due to all of the equipment used for operations, and lumber is highly combustible. This hazard has the ability to completely destroy your entire inventory. 

Commercial property insurance financially protects your business property if it is damaged or destroyed by a covered peril. Covered business property includes buildings, equipment, furniture, and inventory. Common perils include fire, theft, vandalism, windstorm, and water damage.

Example: 

• A fire breaks out in your storage facility, which causes significant structural damage to the building, destroys a large portion of your inventory, and damages much of your expensive equipment. Your commercial property policy would pay to replace your inventory and equipment, and it would provide the necessary funds to repair your building.

Pollution Liability Insurance

There are a number of environmentally dangerous chemicals used in a lumber yard that can contaminate the surrounding ground, air, or water. This includes chemicals used to preserve lumber and pesticides used to prevent insect infestations. 

Pollution liability insurance, also known as environmental impairment liability insurance, provides coverage for environmental liabilities and financial protection for claims of bodily injury, property damage, and cleanup costs as a result of a pollution event. 

Example: 

• Due to the pesticides used in your lumber yard, neighboring communities are affected and suffer itchy eyes, respiratory discomfort, and rashes. Pollution liability insurance would cover the lawsuit and damages if they decide to sue your business. 

General Liability Insurance

General liability insurance can protect your business against accidental third-party incidents that you may be held liable for. This includes claims of third-party bodily injury and property damage. 

General liability insurance is an important policy to consider because third parties—such as customers who visit your business premises to pick up their orders—may come in close contact with the various dangers of the work environment. If your lumber yard is sued, general liability insurance can help to cover the costs of any legal fees or settlements.

Example: 

• When a potential client visits your lumber yard, one of your employees loses control of the forklift and drops heavy lumber on the client’s vehicle. Your general liability insurance would cover the cost of repairs.

Inland Marine Insurance

Inland marine insurance covers products, equipment, and other forms of business property that are not tied to a fixed location and are not covered by commercial property insurance. This is important coverage for lumber yards that transport inventory or equipment between sites or offer delivery services. 

Example: 

• During a delivery, a heavy windstorm causes lumber that was not adequately tied down to the delivery truck to fall out and become damaged. Your inland marine insurance would cover the damages.

Additional Coverages

• Equipment breakdown insurance provides the funds to repair or replace malfunctioned or damaged equipment. Breakdown and loss of your equipment can result in significant financial loss if said equipment is not properly insured. Consider adding equipment breakdown insurance to your commercial property insurance policy as an endorsement or purchasing this insurance as a standalone policy.
• Commercial auto insurance financially covers damages if you or one of your employees are at fault in a collision while driving a company vehicle. This coverage includes medical costs if the other vehicle’s occupants are injured and damages to the other vehicle. Commercial auto insurance also covers your company vehicles if they are damaged or lost due to theft, vandalism, collisions, or other covered hazards. This coverage is essential for lumber yards that offer delivery services. 
• Commercial crime insurance provides protection for businesses from financial losses resulting from criminal acts. This includes forgery, robbery, burglary, theft, and employee dishonesty.

Pricing and Quotes

Pricing for business insurance will vary based on the type of insurance coverage and the risk profile of your business. Insurers consider factors such as:

• Business size
• Industry
• Location
• Number of employees
• Claims history

Businesses with higher risks will have higher premiums than those deemed lower risk. For example, a lumber yard with a history of frequent claims will face higher premiums. Premiums also rise as you increase the limits of insurance. Different insurance companies have different models for rating risks, so it is worth comparing pricing across different insurers.

In order to get an accurate estimate on pricing, it’s best to get a quote from a reputable insurance company. Below we’ve highlighted a few of our trusted partners who offer coverage for lumber yards:

Provider	General Liability	Professional Liability	Business Owner's Policy
Embroker	??	??	??
CoverageSmith	??	??	??
CoverWallet	??	??	??
Hiscox	??	??	??
Thimble	??	??	??

Final Word

It would be wise to consider the various liability risks posed by your business in order to obtain an adequate amount of business insurance coverage. There are a number of steps your lumber yard may take to mitigate risk, but it is impossible to avoid all accidents and injuries. Make sure your business is properly prepared for any unexpected catastrophes.