Grandson's side hustle doing lot clearing and landscaping is getting busy enough that he needs to look into insurance. If he goes full time (which at this point seems like a possibility) he'll need to look into licensing and bonding as well.

I'm not quite completely ignorant on the subject, but pretty close so any input is much appreciated.

Meanwhile, I'll check licensing requirements for the State of Maine.

A brief search of Maine.gov doesn't show any licensing requirement unless you're representing yourself as either a "forester" or a "landscape architect".

Even if doing it as a side hustle, he should protect himself with some form of business entity that shields his assets and be insured. Doesn't take much in the excavating business to have a very expensive oops.

I'm sure it varies to some degree based on state, but around here you would need a business license and possibly a contractor's (or similar) license. Those could be in your personal name, but he'd be better off as an LLC.

He would want liability insurance for the work, and insurance that would cover his equipment if damaged or stolen.

Also worth pointing out that he would need a commercial insurance policy on whatever vehicle he is towing the equipment with. A regular auto policy does not cover you when engaged in income producing endeavors. Depending upon the weight, he may also need a DOT number (even if it's a state DOT), and/or commercial plates.

Forming a company would be the best for asset protection as well as liabilty. Forming an LLC is minimal-unsure of Maine's legal system.
LLC opens the door for small business loan, assitance both Fed and State.

Probably best to speak to an attorney in Maine about the pluses and minuses of forming such a business. Since states differ on requirements to open and operate a business, attorney licensed in that state can advise and thereby minimize overlooking something that turns into an issue down the road.

Texas gov entities (state, county, city, local) require liability and workers comp. In the case of a one person company (owner operator) an exception may be made for workers comp.

Workers Comp is expensive. I once had to hire a fountain cleaner for a Texas Univ decorative fountain in front of a building. The cost of temp WC ins just for that one project would have doubled the cost of the job.

Govt entities have to weigh the risk of getting sued if a contractor is injured vs extra cost of ins.

Many small owner/operators don’t have ins. Too dang expensive.

Having licensed/bonded/insured on your business literature is a powerful message to prospective customers.

If he ever hires casual labor, insurance against potential claims from them is a must.

Yes, he should get General Liability insurance.

To the extent that his activities require him to carry a license, then he should also carry an Errors and Omissions policy. General Liability covers "accidental" damage to others--backing an excavator into a parked car; Errors and Omissions covers "bad work"--not spec'ing the appropriate sized clearing which later creates a fire hazard or something.

Yes, he should get Commercial Auto Liability insurance. His personal insurance will not cover accidents while towing his excavator to and from jobsites.

Yes, he should get Workers Compensation insurance if he hires any labor whatsoever, even if they are not "employees" in his eyes.

Yes, he should ask his clients to provide him a Certificate of Insurance which shows that they have Premises Liability insurance, and ask that he be named as an additional insured for the project. His own liability policies will not cover damage to his equipment or injury to himself due to the negligence of the landowner (undisclosed hazards, failing retaining walls, sink holes, etc.).

quote:

Originally posted by a1abdj:

Also worth pointing out that he would need a commercial insurance policy on whatever vehicle he is towing the equipment with. A regular auto policy does not cover you when engaged in income producing endeavors.

Maybe. I have a delivery truck, a GMC 3500 with a 12-foot cargo box, for my business. Flo was charging me will over $2 K / year when the truck was owned by the business LLC.

The independent agent who handles our family insurance pointed out that if we titled the truck in my personal name and specified that it is used for business, it could be added to our existing family auto policy and we would have better insurance coverage at less than half the premium cost. We followed her advice and save over a thousand $$ / year.

quote:

Originally posted by Aeteocles:
Yes, he should get Workers Compensation insurance if he hires any labor whatsoever, even if they are not "employees" in his eyes.

In that line of work, I’d recommend that he get WC coverage for himself! I’m not well versed in Maine WC laws, but they’re largely the same, so I assume as a sole proprietor he can waive it for himself, but the WC carriers up there very likely offer solo coverage. If he ever needs it, he’ll be glad he had it.

-Rob

Its easy to advise on this. If you do work for someone else for money and you have a nickle of assets you need liability insurance. You also need to take the basic steps to isolate your personal assets from the business assets (meaning some form of corporate entity). And then if there are employees the game is upped by State requirements.
I personally can't imagine investing in equipment and going "naked" on insurance. Every job puts literally everything you own at risk.