Does a tree service company need workers' compensation?

Workers' compensation insurance is mandatory for tree service companies with employees in virtually every state. Only Texas and a small number of other states allow employers to opt out entirely, and even in those states, opting out exposes the business owner to unlimited personal liability for workplace injuries. Given that tree care ranks among the most dangerous occupations in America — with OSHA reporting dozens of fatalities annually — forgoing workers' comp is an enormous financial risk.

Tree service operations fall under NCCI class code 0106 (Tree Pruning, Trimming, or Removal & Drivers), which typically carries base rates between $15 and $40 per $100 of payroll. This means a company with $500,000 in annual payroll could pay $75,000 to $200,000 in workers' comp premiums before any experience modification adjustment. The high rates reflect the reality of the work: chainsaw lacerations, falls from height, struck-by injuries from falling limbs, and electrocution from power line contact are all common.

Your experience modification rate (EMR) is a multiplier applied to your base premium. A new company starts at 1.0. Companies with fewer claims than expected earn EMRs below 1.0, reducing premiums. Companies with excessive claims see their EMR climb above 1.0, sometimes dramatically. A company with an EMR of 1.4 pays 40 percent more than the base rate, while a company at 0.75 pays 25 percent less. Managing your EMR through rigorous safety programs is one of the most effective ways to control your largest insurance expense.

OSHA's general duty clause requires employers to provide a workplace free of recognized hazards. ANSI Z133 provides specific safety standards for arboricultural operations, including requirements for personal protective equipment, aerial lift operation, and chainsaw use. Implementing a formal safety program based on these standards — including documented training, daily tailgate meetings, and incident reporting — directly reduces your claims frequency and, over time, your EMR and premiums.

Some states allow sole proprietors and corporate officers to exempt themselves from workers' comp requirements. However, many general contractors and commercial clients will not hire subcontractors who lack workers' comp coverage, regardless of legal exemptions. If you are a sole proprietor working without employees, check your state's specific requirements and consider carrying coverage voluntarily to avoid being shut out of commercial work.