Forestry Insurance: Liability, Programs, Costs & More


Published on February 17, 2022

The harvester working in a forest.

Forestry insurance programs play an essential role in safeguarding the financial health of businesses that operate within the forestry and timberlands sectors. According to the United States Department of Agriculture (USDA), the US forest products industry accounts for four percent of the nation's total manufacturing GDP, producing over $200 billion in products every year. Forest lands in the US include 823 million acres of forests and woodlands that comprise one-third of the nation's landscape. More than half of the timberlands in the US are privately owned, with most public ownership in Western states.

What is Forestry Insurance & Who Needs It?

Although the terms are somewhat analogous, for purposes of this Guide to Forestry Insurance Programs, we distinguish between forestry insurance and forest insurance. 

Forestry insurance protects a wide range of logging operations and timberland owners. The programs help pay for covered losses to farmers, ranchers, loggers, wood yards, chipping operations, sawmills, planer mills, pulp and paper mills, wood dimensioning, lumbering, land clearing operations, and more.

Forest insurance is property coverage for the trees and forests themselves. It covers the gamut of mature, growth, and predominantly sapling forests and includes shrubs, plants, grasses, vines, bushes, and hedges. The coverage helps to pay for losses resulting from fire, lightning, floods, storms, insects, animals, theft, vandals, and other causes of tree and vegetation losses. 

Types of Forestry Insurance 

Forestry, aka arboriculture, businesses have unique and traditional needs for the various forms of forestry liability and property insurance coverages found in robust forestry insurance programs. While every forestry operation has individual insurance requirements, nearly all need the mix of coverages detailed in the list below. 

Truck & Tractor Coverage

Truck and tractor insurance, also called commercial truck insurance, protects trucker and business insureds from damage and liability-related losses.

State laws require commercial truck insurance, which usually is regulated by a trailer's hauling capacity. The Federal Motor Carrier Safety Administration (FMCSA) also requires specific insurance requirements for trucks in use for interstate destinations. In addition, the FMCSA requires those seeking an Operating Authority (MC number) first to obtain liability insurance specifying coverage for claims of bodily injury and property damage.

Interstate truckers must also meet the following minimum coverage limits per FMCSA rules, with the limit depending on the type of freight hauled. For example, the FMCSA rules for minimum insurance limits, types of cargo carried, and the vehicle size that dictates the least allowable coverage are: 

  • $300,000 for non-hazardous freight moved in vehicles under 10,001 lbs.

  • $750,000 for non-hazardous freight moved in vehicles over 10,001 lbs. 

  • $1,000,000 for oil carried by For-Hire & Private Carriers

  • $5,000,000 for other hazardous material hauled by For-Hire & Private Carriers

The liability portion of the coverage protects the public and drivers and truck owners from accidents where the trucker is at fault. Bodily injury covers medical bills to others, including drivers, occupants, and pedestrians injured in an accident with the truck driver at fault. In addition, property damage helps pay for replacement and repair damages to the property of others in an accident caused by the truck driver.

Inland Marine

Inland marine insurance covers property used in multiple locations and is not permanently assigned to or installed in a specific area. It protects mobile equipment, machinery, tools for logging, and other forestry industries equipment while in transit to a job site. It can also cover specialty equipment and property that has exceptional value.

Coverage for rental reimbursement for rented or leased equipment, miscellaneous tools and equipment, trailer and spare parts, and replacement cost coverage is usually available as a policy endorsement. 

Equipment Breakdown Insurance

Equipment breakdown insurance covers the expensive machinery and equipment a logging business needs to operate. The nature of the business causes wear and tear. The coverage helps to cover costs to repair and replace it. In addition, insurers can identify specific pieces of equipment such as processors, feller bunches, slashers, and sliders to cover with equipment insurance. Additionally, they should consider the value of their entire fleet, including trailers, backhoes, and other tools and equipment.

Logging equipment can also include specialized machines like a skidder or loader designed for a particular purpose. For example, a skidder may have a bucket with a large capacity, while another type has a smaller capacity but can handle more material. For example, a skidder may have tracks or wheels. The size and weight of the machine will determine how much insurance coverage it needs.

Contractor's Equipment Floater 

This coverage helps pay costs related to damage to logging equipment resulting from vandalism, lighting, hail, and other specified perils.

Cargo Insurance

Cargo insurance protects the load a truck carries while transporting it. Shipping trees, lumber, and associated goods represent a potentially high risk for lost, damaged, hijacked, or even destroyed products that can occur in transit. From raw to finish, transporting products represents a significant possible loss that cargo insurance covers. Cargo insurance protects cargo moved by trucks, utility vehicles, and other vehicles specific to the industry. In addition, it protects against losses and damage due to collisions or vehicle overturns.

Coverage includes liability for damage to other people's property, repair or replacement expense of damaged goods (with loss payable clause), and loss proceeds for total losses. It also covers replacement costs for perishable items and related freight and storage charges. Cargo insurance coverage extends to theft, collusion damages, and other risks involved in freight shipping. In addition, a standard cargo insurance policy requires motor carriers to have $750,000 - $1,000,000 minimum limits. 

Pollution Insurance

Pollution liability insurance protects a business against losses when found at fault for accidents that cause environmental contamination. Pollution insurance is a form of gap insurance kicks in to pay for losses not covered by a general liability policy.

The list of substantial environmental risks in logging and forestry operations is lengthy. And although logging operations help decrease the fuel load for wildfires, they can pollute streams, destroy the natural habitat, cause erosion, and release toxic chemicals into the environment. Also, because the logging business produces considerable non-point pollution, it is susceptible to liability claims, legal actions, and catastrophic cleanup costs. In addition, pollution insurance helps to cover losses from bodily injury claims, cleanup, and property damage caused by logging operations.

General Liability

General liability safeguards logging operations from third-party bodily injury claims, property damage, or both. The policy helps cover costs of lawsuits and settlement fees to a customer, employee, visitor, or vendor who suffers injuries where the company is found at fault. Payouts can be for actions resulting in financial loss, a physical injury, or both.

Workers Compensation 

Workers Comp is a legal requirement in virtually every state. As a mandate, it is a legal mechanism to protect employees who work for companies operating in the state and who suffer work-related injuries. Workers Compensation covers any medical care costs they incur, and it provides wage compensation while they recover and rehabilitate from their injuries. 

Commercial Property 

Commercial property covers offices and other structures and their contents. It can extend to yard operations outfitted with logging equipment and storage areas for staging cut timber awaiting transportation. Additionally, it covers losses stemming from natural causes such as lightning, hail, and other specified perils.

Commercial Auto

Commercial auto provides coverage for auto liability & auto physical damage with a combined single limit (CSL) of $1M for select logging contractors. 

Additional Coverages

While this list highlights the types of policies found in forestry insurance programs, it is not complete as circumstances vary per client needs. Your program manager can assist you with additional types of coverages for your forestry insurance customers. Examples of other policies include:

  • Loggers broad form property damage covers loading and unloading, fire suppression, and damage to forests and timberlands  

  • Excess Liability

  • Crime

  • Aircraft / Helicopter Insurance

  • EPL, and more

Forestry Insurance Costs (and what factors affect the price)

The insureds who can benefit from a Forestry Insurance Program include small family-run businesses to multinational corporations—as such, providing specifics on the costs for the wide range of policies found in forestry insurance programs is not possible. Furthermore, underwriters look carefully at claims and coverage history, credit ratings, driving records, and more before determining a premium. 

Individual factors for commercial truck insurance cost include the trailer's size and the value of both the trailer and the contents it is hauling. And the type of contents it is transporting. For example, small loggers will find the average premium for a standard $1,000,000/$2,000,000 General Liability Insurance policy runs between $1,000 - $1,200 annually depending on the business's location, size, revenue, and claims history.

Best Forestry Insurance Programs

Naturally, when you research for the best Forestry Insurance Program, you want quick, helpful results. That is where the Program Business Marketplace Directory helps. It serves both sides of specialty program distribution by making it convenient for carriers, MGAs, wholesalers, and program administrators to connect with agents with a new program.  

A great example is when you search the platform for Forestry Insurance Program best suited for your needs, you'll find return Arrowhead General Insurance Agency. Since its inception in 1983, it has continued to lead the industry with innovative, pioneering solutions that simplify the insurance experience, build trust, and reduce uncertainty. 

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