Have you ever wondered why there is often such a drastic difference in prices between different tree services? I can answer this in three words: workers compensation insurance.
I know what you are probably thinking right now. You are thinking that before you hire a tree service (or any service provider for that matter) you always request a certificate of insurance (COI) to verify proof of workers compensation insurance. Unfortunately, thanks to what is known as a Ghost Policy, a COI does not mean the tree service actually has any real insurance protection for its employees.
A Ghost Policy is a policy designed for a company with only one member (the owner) and no employees. It is an extremely cheap way for an individual to obtain a COI in order to win bids and projects that require workers comp insurance coverage.
The Ghost Policy, however, has opened a major loophole. Many tree services with employees still purchase this Ghost Policy by claiming either they they have no employees (and pay them off the books) or that their employees are sub-contractors, which is illegal given Federal and State law. By obtaining a Ghost Policy, a tree service is able to show you a COI while saving anywhere from $30,000 to well over $300,000 per year. This allows that service to offer much lower prices – hence the drastic variation in pricing between companies with legitimate insurance and those without.
But here is the incredible danger: by doing this, that service exploits its employees and puts you the client at great risk. If someone is injured on your property, you could be held responsible for medical and related costs.
The good news is that there are ways to avoid hiring such a service. Read our full article The Dangerous Truth About Ghost Insurance Policies to learn more.
Be sure to let us know what you think!